1099 to deadbeats (by Eddy Mac [IL]) Apr 17, 2014 12:22 PM|
1099 to deadbeats (by V [OH]) Apr 17, 2014 1:25 PM
1099 to deadbeats (by AllyM [NJ]) Apr 17, 2014 2:06 PM
1099 to deadbeats (by Nicole [PA]) Apr 17, 2014 4:41 PM
1099 to deadbeats (by Kyle [IN]) Apr 17, 2014 5:35 PM
1099 to deadbeats (by Eddy Mac [IL]) Apr 17, 2014 7:54 PM
1099 to deadbeats (by marv [IL]) Apr 18, 2014 5:36 AM
1099 to deadbeats (by John... [MI]) Apr 18, 2014 6:59 AM
1099 to deadbeats (by Dan [MA]) Apr 18, 2014 9:14 AM
1099 to deadbeats (by John... [MI]) Apr 18, 2014 10:34 AM
1099 to deadbeats (by Eddy Mac [IL]) Apr 18, 2014 1:58 PM
1099 to deadbeats (by V [OH]) Apr 18, 2014 4:28 PM
1099 to deadbeats (by Dan [MN]) Apr 18, 2014 5:01 PM
1099 to deadbeats (by John... [MI]) Apr 21, 2014 8:52 AM
1099 to deadbeats (by LandlordWhisperer [VA]) Apr 23, 2014 11:19 AM
1099 to deadbeats (by Eddy Mac [IL]) Posted on: Apr 17, 2014 12:22 PM
I was thinking of starting to hand out 1099's like candy to my deadbeat tenants or people who left owing me any dollar amount. When it costs $12 for it, why not? I'm going to be coming up with a clause on my lease stating the large fee for sending their file to collections because in reality if they end up owing me 2,000 or something less they will only get taxed on their income bracket which will not be that much at all, I'm sure they don't know that though. Does anybody else do this on often?
To be honest, from the help through from you guys and Mr. LL I am getting better with turn overs and people skipping out, but they do slip through the cracks still.
1099 to deadbeats (by V [OH]) Posted on: Apr 17, 2014 1:25 PM
It is most effective with subsidy tenants, this closes the freeby door - suddenly they have certified funds to clear this up, I have taken some motorboats, cars, motorcycles from deadbeats in years past. --75.94.xxx.xxx
1099 to deadbeats (by AllyM [NJ]) Posted on: Apr 17, 2014 2:06 PM
I should send a 1099 to the glass company who lost my shower door and won't give my deposit back.
Olde Miss Ally --69.141.xxx.xxx
1099 to deadbeats (by Nicole [PA]) Posted on: Apr 17, 2014 4:41 PM
I wouldn't. If they have no money, they have no money ... the threat of a 1099, which most of them don't even know what it is, is not going tomake them to cough up the cash. what it will do is stop you from collecting down the road if they need to clear their credit.
Actually, you are giving them a good "out". They owe you $2,000. You 1099 them and if they're in the 10% bracket it will only cost them $200 - a lot better than $2000. Maybe they're rolling in the dough and just won't pay you ... because. they're in the 39% bracket. It will cost them $780 - again, a lot cheaper than $2000.
what do you get? Maybe, possibly, probably not someone coming up with the back rent. --174.55.xxx.xxx
1099 to deadbeats (by Kyle [IN]) Posted on: Apr 17, 2014 5:35 PM
I agree with Nicole. They may not even notice the reduction in their refund. The average refund this year is $3k and I know many in my tenant pool receive more than that. That $200 the government gets from your debt cancellation is less than they are paying to have the forms filled out for them.
If you hang on to a judgment, even without pursuing collections, there is a chance you will get a payoff at some point when the deadbeat needs to clear up their credit. Maybe they got financially smart and saved up to buy their own home, but have to pay you off to qualify for the mortgage. Or maybe they are inheriting a house, but the title cannot transfer to them until they clear up the judgment.
In any case, if you cancel the debt, you pay $12 and get nothing. --68.46.xxx.xxx
1099 to deadbeats (by Eddy Mac [IL]) Posted on: Apr 17, 2014 7:54 PM
Now its coming back to me... I think it was your post a while back that said you did that before. That sounds good and all but whats the process?
Go to the secretary of state, find out their vin # then put a lien on title? I'm know my way with the court system garnishing wages(if I know where they work), I refuse to get a tenant in court to do a discovery of assets. So the part on taking cars or boats away from people has me thinking...
I still like telling the tenant about forgiving the debt because they are not smart enough to know about taxable income. They don't know its 15% of what they owe. --50.178.xx.xxx
1099 to deadbeats (by marv [IL]) Posted on: Apr 18, 2014 5:36 AM
If you read the instructions on the 1099c, you will find that it is only to be used by financial instituions (banks and cc companies). --173.15.xx.xxx
1099 to deadbeats (by John... [MI]) Posted on: Apr 18, 2014 6:59 AM
When this came up before, I did some research on it. Here is what I posted in January of 2013 related to this question as far as whether or not LLs are ALLOWED to file a 1099-C even though financial institutions are REQUIRED to do it:
I have seen repeated confusion on that -- even from Marv here (who tends to know his stuff). MY understanding is that the confusion comes from the difference between those that are REQUIRED to report using the 1099-C and those that are ALLOWED to report using it. Basically, those REQUIRED to file a 1099-C for forgiving debt include:
"financial institutions, credit unions, and organizations whose significant trade or business is the lending of money"
Again, that is a list of who MUST use the form. Therefore, a lot of people seem to think "Ok, Landlords are not on that list, so they CANNOT use the form." Back in 2010, Marv stated that it could "only be used by banks." However, I disagree with that -- and I'm fairly certain the IRS does too.
See this IRS memo:
The question basically asked was: "May an individual or entity not REQUIRED to file a Form 1099-C under section 6050P of the Internal Revenue Code nevertheless voluntarily file such a form?"
The summary answer:
"Individuals or entities not required by section 6050P to file Form 1099-C may nevertheless voluntarily file such forms in appropriate circumstances."
It also states: "While the requirement to report discharges of indebtedness applies only to the entities described above, there is no specific prohibition in the Internal Revenue Code or the Income Tax Regulations that forbids the reporting of discharges of indebtedness by entities not required to report. Such reporting may encourage voluntary tax compliance and proper gross income inclusions."
You can read the whole thing for more details, but my general understanding of it is that we can indeed file 1099-C forms for forgiving debt. These articles agree with my interpretation:
So, I think we're fully allowed to issue a 1099-C.
P.S. I am not a lawyer or tax advisor. Your mileage may vary. Look both ways before crossing.
1099 to deadbeats (by Dan [MA]) Posted on: Apr 18, 2014 9:14 AM
You realize that by issuing them the 1099, you are forgiving the debt and forfeiting your rights to try and collect it in the future. --64.197.xx.xx
1099 to deadbeats (by John... [MI]) Posted on: Apr 18, 2014 10:34 AM
Indeed -- people need to realize that this is a "only thing left and I'm giving up on EVER collecting anything" situation.
That's why I don't do it. I'd rather leave the debt on them. There is always the chance that I'll get to collect either due to a credit issue or they actually get a job and I can garnish.
1099 to deadbeats (by Eddy Mac [IL]) Posted on: Apr 18, 2014 1:58 PM
Great info John! --50.178.xx.xxx
1099 to deadbeats (by V [OH]) Posted on: Apr 18, 2014 4:28 PM
I try to get the title before eviction begins, I post 3day then when they call - hey that 17ft bowrider is worth the rent owed - lets go do the title change sat morning and I will not file monday morning but if you are out in that week - dont test my patience - you will fail.
I come take the boat out sat after the title is changed leaving them more room to move out, park it at the next fixing house. Then if no mountain of garbage on trash day post a new 3day and then watch the excitement - honey Mr V was not kidding we are gonna get evicted next week! Suddenly the gas pedal is down and the lawn is getting broken things.
Now after court if they do showup ask them to sign the 1099 because they want out and this helps them now but hurts them later when food benefits get a haircut or housing becomes ineligible because income too high - now the panic is at heart attack speed, have the housing office call me to see if this can be reversed, Oh it can if they pay me back in full? - lets do that if they want to meet your criteria! Badda Badda Bing! --75.94.xxx.xxx
1099 to deadbeats (by Dan [MN]) Posted on: Apr 18, 2014 5:01 PM
47% of Americans don't pay taxes, and you want to send the "deadbeats" a 1099? I would either forget about it, buy properties in nicer areas, or screen better. --66.87.xx.xxx
1099 to deadbeats (by John... [MI]) Posted on: Apr 21, 2014 8:52 AM
Dan: You miss the point. Those that send 1099s in these situations don't do it because of the money. They do it to try to get them into trouble. Tenants don't know what to do with stuff like that. They ignore it. It never gets reported, but the IRS gets their copy, of course.
It's something LLs do to people to hope that they get audited and such. It's just a last-ditch effort to get a little revenge, I think.
As I said, I don't do it. Not my think. Just explaining where that comes from.
1099 to deadbeats (by LandlordWhisperer [VA]) Posted on: Apr 23, 2014 11:19 AM
I have a $250 fee to file a satisfaction of judgement AND I charge to send files to a debt collector. --184.6.xx.xx