How do you handle cash payments (lawn, etc) and taxes?
6 Replies
Steve S.
from Dallas, Texas
posted over 3 years ago
If a neighborhood kid mows your lawn do you 1099 them? What's the impact of not sending the 1099? Do you lost the payments on your expenses?
Logan Allec
Accountant from Los Angeles, CA
replied over 3 years ago
Landlords issuing 1099s is a grey area.
There is no strict requirement for landlords to issue 1099s, and I have never heard of the IRS going after landlords for failure to file 1099s.
That being said it does not necessarily mean that 1099ing your contractors is a bad idea.
And remember the 1099 threshold for something like mowing lawns is $600 for the year per recipient.
Logan Allec
Accountant from Los Angeles, CA
replied over 3 years ago
The issue is whether one's real estate activities rise to the level of a trade or business, which they don't for the vast majority of BP landlords.
Now if real estate is your full-time thing and you're a real estate professional, you should consult with a CPA on this matter, but if you just have a handful of rentals that you manage on the side, no, you don't need to issue 1099s.
Steve S.
from Dallas, Texas
replied over 3 years ago
Thanks. Does not issuing one affect how much I can expense?
Logan Allec
Accountant from Los Angeles, CA
replied over 3 years ago
No.
Patrick M.
Rental Property Investor from Red Bank, NJ
replied over 3 years ago
If I pay cash for something I don’t put it any where near my taxes (with very, very limited exceptions). If I would be claiming someone’s services I pay by check and get their social.
My expenses are backed up by receipts and done via credit card or check.
Jimmy Dudley
Real Estate Broker from Westminster, Maryland
replied over 3 years ago
I don't know how much you are paying the kid to mow your lawn. Have you considered writing the kid a check and using that as a record of payment?