Landlord · Seattle, WA · Member since 2010 · 3k+ posts · 1k+ votes
Under the new legislation designed to help small businesses was a small add on that is now going to require landlords to issue 1099s to any contractor performing services like repairs over $600.
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
15y
And to clarify what Charles mentioned, it's for TOTAL paid to anybody over $599. So, if your plumber comes out a few times for $200 each trip, you will exceed the threshold and you'll need to generate that 1099.
Now, in 2010, you will not have to do that if the recipient is a corporation (C or S); you have to 1099 any LLC or sole proprietor.
The change for 2011 is that even corporations will need to be sent a 1099.
And to properly issue a 1099, you will need to get a W-9 filled out (to get Tax ID and to determine if recipient is exempt from withholding - which would be at 28% I believe).
Real Estate Investor · Austin, TX · Member since 2009 · 66 posts · 12 votes
15y
Thanks for the post, Charles. The article states that this begins jan 1, 2011, so i believe that means this will be applicable to future work performed, no change for what the requirement is for 2010. Is that how you read it?
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
15y
And to clarify what Charles mentioned, it's for TOTAL paid to anybody over $599. So, if your plumber comes out a few times for $200 each trip, you will exceed the threshold and you'll need to generate that 1099.
Now, in 2010, you will not have to do that if the recipient is a corporation (C or S); you have to 1099 any LLC or sole proprietor.
The change for 2011 is that even corporations will need to be sent a 1099.
And to properly issue a 1099, you will need to get a W-9 filled out (to get Tax ID and to determine if recipient is exempt from withholding - which would be at 28% I believe).
Landlord · Seattle, WA · Member since 2010 · 3k+ posts · 1k+ votes
15y
I need to review if healthcare legislation applies to real estate investors (aka landlords) that are not business owners. If it does that also means you will have to report any goods purchased of 600 or more.
Residential Real Estate Broker · Payson, AZ · Member since 2009 · 3k+ posts · 1k+ votes
15y
Originally posted by Steve Babiak:
And to clarify what Charles mentioned, it's for TOTAL paid to anybody over $599. So, if your plumber comes out a few times for $200 each trip, you will exceed the threshold and you'll need to generate that 1099.
So never use the same guy twice just to save yourself from some additional headaches kinda sucks :cry:
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
15y
Nick,
W-9 and 1099 aren't all that painful IMO, since the W-9 is a one-time form for the contractor to fill out - and since Quickbooks tells me how to fill in the 1099 in January anyway. I just go to the local IRS office, get a bunch of blank 1099 forms, and write them out by hand (I don't do enough to make it worthwhile to buy the Quickbooks compatible forms, plus I think they require a special type of printer).
It's just in the future, the number of 1099 and W-9 forms that I will have is going to increase a bit.
Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
15y
Just for some perspective, anyone who has hired contractors who own unincorporated businesses -- or are sole proprietors -- should have been doing this anyway. Most of the contractors I use have LLCs, and therefore I've been collecting W9s and sending 1099s since I started in the business.
The big change is that now we'll have to do it with the incorporated businesses we contract as well, which will increase the number of 1099s by about a third. More work for my CPA... :)
Landlord · Seattle, WA · Member since 2010 · 3k+ posts · 1k+ votes
15y
For those in business it is the 1099s for every company you purchased goods from that will really increase the number of 1099s.
Services that people might have considered. Cell phone providers, advertising, utilities
Goods - think Home Depot or any of a number of providers.
How about those goods you bought on ebay, amazon etc.
There are going to be some that never issued 1099s that may have more than a dozen 1099s to issue. Others that may have over 100 1099s that must be prepared. There is a $250/return penalty for not filing the returns.
Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
15y
Charles -
Is it accurate to say that if you're not planning to take a deduction for something you purchased, that you're won't have to issue a 1099.
For example, I deduct vehicle expenses based on mileage, not actual costs, so I imagine I wouldn't have to issue 1099s to my mechanic or the gas stations where I buy gas.
I sure hope the government doesn't expect my tenants to issue me a 1099 every time they hand me the rent, because I'll go to jail before I'd ever give my tenants my SS#.
Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
15y
Originally posted by Charles Perkins:
For those in business it is the 1099s for every company you purchased goods from that will really increase the number...
Charles,
According to the article you linked, the 1099s are required for services received...it doesn't say anything about goods purchased. Is that part of the same bill or is that a future consideration?
Landlord · Seattle, WA · Member since 2010 · 3k+ posts · 1k+ votes
15y
Originally posted by J Scott:
Originally posted by Charles Perkins:
For those in business it is the 1099s for every company you purchased goods from that will really increase the number...
Charles,
According to the article you linked, the 1099s are required for services received...it doesn't say anything about goods purchased. Is that part of the same bill or is that a future consideration?
Scott that is true. Many landlords are just investors and have no actual business. In this case the Small Business Act applies. If you have a business of any kind then the business also falls under the healthcare legislation which added 1099s for goods and services over $600. For many there will be no need to send a 1099 to their mechanic.
Landlord · Seattle, WA · Member since 2010 · 3k+ posts · 1k+ votes
15y
Originally posted by P NW:
I sure hope the government doesn't expect my tenants to issue me a 1099 every time they hand me the rent, because I'll go to jail before I'd ever give my tenants my SS#.
Tenants are not investors or in business. Tenants would have no reason to be required to send you a 1099. There is going to be a lot of confusion in the first year or two. I hope this legislation is repealed or greatly changed in the coming months.
Landlord · Seattle, WA · Member since 2010 · 3k+ posts · 1k+ votes
15y
Originally posted by Chris Martin:
My understanding is that only commercial tenants would issue you a 1099. If you rent residential property, the tenant would not issue a 1099.
That is true. Commercial tenants would have a business and would be receiving a service so they would be required to send there landlord a 1099. This actually hasn't changed for most landlords. I don't believe there were that many that were incorporated in the past. I always get 1099s from the housing authority for section 8 tenants.
Is it accurate to say that if you're not planning to take a deduction for something you purchased, that you're won't have to issue a 1099.
For example, I deduct vehicle expenses based on mileage, not actual costs, so I imagine I wouldn't have to issue 1099s to my mechanic or the gas stations where I buy gas.
Real Estate Investor · Austin, TX · Member since 2009 · 66 posts · 12 votes
15y
IMO you are not deducting the costs of the repairs from your mechanic (or auto insurance) etc. as individual line items. that is all included in the mileage deduction that is being utilized, so you do not need to send them a 1099. I would imagine if you somehow were deducting the actuals (insurance, car payment, reapirs, instead of the mileage deduction, that would be a different story. I am not an accountant, so run it by yours for sure, but this is how I interpret it.
Contractor · Philadelphia, PA · Member since 2009 · 85 posts · 65 votes
15y
This legislation is one more effort to end the underground economy funded by cash transactions.
I would bet most handyman used by the REI industry are under the table I would bet 80% don't even file tax returns. This will put an end to all but green cash transactions. But then again I would bet these folks also do not have medical insurance.
Buy and Hold Investor · Commack, NY · Member since 2008 · 358 posts · 33 votes
15y
Originally posted by Charles Perkins:
Under the new legislation designed to help small businesses was a small add on that is now going to require landlords to issue 1099s to any contractor performing services like repairs over $600.
So how does this "help" small business? Sounds to me like it's just another shot to kill small business in this country by making it that much harder to do business. Way to go BBO! (Big Brother Obama) :roll:
Real Estate Investor · OH · Member since 2008 · 1k+ posts · 86 votes
15y
This will make the cost of services go up. Any time I use a contractor for cleanouts or just crap work that I don't want to do, it's a cash transaction. If I have to 1099 these guys, a $300 clean out just went up to $400 bucks. I guess as it was suggested, instead of paying "Joe's handyman" for work all year. We pay Joes cleanout, Joe the painter, Joe the trash hauler... This is the only way I see around this situation.
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
15y
Originally posted by Tom C:
This will make the cost of services go up. Any time I use a contractor for cleanouts or just crap work that I don't want to do, it's a cash transaction. If I have to 1099 these guys, a $300 clean out just went up to $400 bucks. I guess as it was suggested, instead of paying "Joe's handyman" for work all year. We pay Joes cleanout, Joe the painter, Joe the trash hauler... This is the only way I see around this situation.
Again, you don't have to 1099 amounts until the total paid out to any single entity exceeds $599 in a tax year.
So you hire that guy for that amount once a year, and you don't have to issue a 1099; hire him a second time in the same year for that amount, and you will have to issue a 1099.
My guess is that you don't issue any 1099s yet, but if you had been doing so already, I'd suggest the pain of doing so can be minimized with some bookeeping software. Certainly does require some added effort, but not to the point of a 30% increase in costs.
Now, notice I mentioned "single entity" there; if you pay somebody by paying their LLC, and then by paying them as a sole proprietor ...
Buy and Hold Investor · Commack, NY · Member since 2008 · 358 posts · 33 votes
15y
"Now, notice I mentioned "single entity" there; if you pay somebody by paying their LLC, and then by paying them as a sole proprietor ..."
I think that's what Tom meant when he indicated the first time you pay "Joe the Painter", next time "Joe the Handyman", etc. Does anyone know if there is anything specific in the regulations about if a person has "multiple businesses"?
Most of the contractors I deal with are working as DBA's, depending on what part of the country I'm dealing with. The invoices might just have to come from their different DBA business entities! Of course if one job is over $600, then I guess it's a moot point.
It's hard enough to find decent contractors that you actually want to work with. I could foresee losing some of that small group if they want to stay more under the radar.
Real Estate Investor · OH · Member since 2008 · 1k+ posts · 86 votes
15y
Yeah my point is that I have a kid that does projects for me that I either don't have time to do or want to deal with.. I pay him cash throughout the year. I still claim it as a operating expense. What he does on his end, I don't care. Now, if I pay this kid over $600 a year, he is going to certainly have to claim it as income, which may have many different impacts on his life. Such as just pushing his family over the income threshold.
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
15y
Originally posted by Charles Perkins:
I need to review if healthcare legislation applies to real estate investors (aka landlords) that are not business owners. If it does that also means you will have to report any goods purchased of 600 or more.
LOL, guess that would mean you need to get the info from AT&T for your phone bill and from other entities that provide services...... :roll:
Guess too that means paid in cash in hand won't be deductable!