How do you handle cash payments (lawn, etc) and taxes?

6 Replies

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?

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.

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.

Thanks. Does not issuing one affect how much I can expense?

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.

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? 

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