New Important 1099 Info (by WMH [NC]) Dec 17, 2021 5:52 PM|
New Important 1099 Info (by Richard [MI]) Dec 17, 2021 6:30 PM
New Important 1099 Info (by 6x6 [TN]) Dec 17, 2021 7:15 PM
New Important 1099 Info (by Lana [IN]) Dec 17, 2021 8:23 PM
New Important 1099 Info (by plenty [MO]) Dec 17, 2021 8:26 PM
New Important 1099 Info (by Still Learning [MH]) Dec 17, 2021 10:10 PM
New Important 1099 Info (by Richard [MI]) Dec 17, 2021 10:59 PM
New Important 1099 Info (by BRAD 20,000 [IN]) Dec 18, 2021 12:39 AM
New Important 1099 Info (by Robert J [CA]) Dec 18, 2021 7:03 AM
New Important 1099 Info (by Dave [MO]) Dec 18, 2021 7:21 AM
New Important 1099 Info (by WMH [NC]) Dec 18, 2021 8:51 AM
New Important 1099 Info (by S i d [MO]) Dec 18, 2021 9:54 AM
New Important 1099 Info (by WMH [NC]) Dec 18, 2021 5:59 PM
New Important 1099 Info (by WMH [NC]) Dec 19, 2021 10:46 AM
New Important 1099 Info (by don [PA]) Dec 20, 2021 4:17 AM
New Important 1099 Info (by Marv [IL]) Dec 20, 2021 8:29 AM
New Important 1099 Info (by myob [GA]) Dec 20, 2021 10:48 AM
New Important 1099 Info (by Jim [OH]) Dec 20, 2021 6:25 PM
New Important 1099 Info (by Busy [WI]) Dec 20, 2021 7:02 PM
New Important 1099 Info (by Marv [IL]) Dec 21, 2021 8:18 AM
New Important 1099 Info (by Busy [WI]) Dec 21, 2021 3:06 PM
New Important 1099 Info (by Busy [WI]) Dec 21, 2021 3:07 PM
New Important 1099 Info (by Busy [WI]) Jan 4, 2022 2:00 PM
New Important 1099 Info (by KeyBoy [NJ]) Jan 21, 2022 2:11 PM
New Important 1099 Info (by KeyBoy [NJ]) Jan 21, 2022 2:16 PM
New Important 1099 Info (by KeyBoy [NJ]) Jan 21, 2022 4:02 PM
New Important 1099 Info (by WMH [NC]) Jan 21, 2022 5:18 PM
New Important 1099 Info (by WMH [NC]) Posted on: Dec 17, 2021 5:52 PM
Edited info from my CPA:
Important 1099 Information Ė Ignore at Your Own Risk!!
Beginning with the 2020 tax year, the IRS requires business taxpayers to report nonemployee compensation on the Form 1099-NEC instead of on Form 1099-MISC. Businesses will need to use this form if they made payments totaling $600 or more to a nonemployee, such as an independent contractor.
If you have a trade or business, you are likely required to file 1099s, 1098s and other similar forms. Penalties for flawed or missed filings have increased. Penalties for incorrect or missing Tax ID Numbers are very high (up to 40% of the 1099 itself!).
Obtaining a W-9 from each contractor can help shield you from such liability - strongly recommend getting a W-9 from contractors (preferably before you pay them). If the TIN you receive is wrong (i.e. - you did not receive a W-9), then YOU are on the hook for the contractor's taxes at very high rates! If you obtain a W-9 and the information on it is wrong, then you are not on the hook for the contractor's taxes if & until the IRS sends you a letter telling you to withhold on payments made to them. Get a W-9!
When are the Forms Due?
You must send the form to each person you paid in 2021 by January 31st, 2022.
Software Generated Forms and Electronic Filing
Filings must be generated with approved software and most must be filed electronically. Non-compliant forms (e.g. - hand-written) & filings may give rise to audits and penalties.
Who Must File: You must file if your trade or business pays someone a total of $600 or more during the year. You are typically not required to send 1099 to businesses that are incorporated. If the business is a LLC, they might or might not be incorporated. There is a spot on the W-9 that they have to check to say if they are incorporatedÖGet a W-9!
ē 1099 NEC - The payment is made to someone who is not your employee, for services in the course of your trade or business, to an individual, partnership, estate, or corporation, and is at least $600 for the year. It also includes payment to an individual of at least $10 in royalties, or if the business has withheld any federal income tax under the backup withholding rules regardless of the amount of payments for the year to the nonemployee. This also includes payments of more than $600 for attorney fees.
ē 1099 MISC - Miscellaneous income, including rent or royalty payments, direct sales of $5,000 or more. SDIRAs involved in flipping should follow the 1099 MISC requirements.
ē 1099-A: Required if you repossessed real property from a buyer but did not necessarily write off the underlying debt. Such a form is often issued when a bank forecloses on a property.
ē 1099-C: Required if you forgave debt. This form is normally issued in conjunction with short sales, deed in lieu and bankruptcies.
There are four basic kinds of penalties:
ē Failure to make electronic filing: $50 per form /$194,500 maximum, if not more than 30 days late. For filings 31 days late until August 1: $110 per form / $556,500 maximum. After August 1 or not at all: $270 per return/ $1,113,00 maximum.
ē Intentional disregard: $550 per form/no limitation, depending on a number of factors. The IRS has become increasingly aggressive and prone to arguing that any failure to file was intentional and therefore subject to the maximum penalty.
ē Granddaddy: If you fail to report someone's income and they are audited and unable to pay taxes on that income, the government can come after you for the taxes if you failed to 1099 the person in question. IRS Disallows Deductions: We have seen auditors become aggressive on disallowing deductions in audits when related 1099's were not issued.
NOTE: Please note that the IRS now asks whether you were required to file 1099s, and if so, whether you in fact filed them. We are required to truthfully answer those questions. If the answers indicate a problem (i.e. - did not file 1099s), you should expect an audit and penalties. Worse yet, if the answers are inaccurate (i.e. - you state that you filed when you in fact did not), the IRS can assess very painful penalties (much worse than those we described above) for civil fraud. In short: The IRS is now very serious about 1099 requirements and very interested in assessing penalties for failure to comply with increasingly complex laws. --108.56.xxx.xx
New Important 1099 Info (by Richard [MI]) Posted on: Dec 17, 2021 6:30 PM
Did you think the govt would not do this?
As I read one part of it, every tenant should be asking for our soc sec number or tax ID number and send us a 1099.
I recommend that every one of us landlords get a Federal Tax ID number so that we may provide that to the tenants when they ask for one. As far as I know they are free and quick to get through the IRS website at IRS(dot)gov. I, for one, have no intention of just handing out my social security number to tenants. Also, get a safe address for your business (PO BOX?) where you may receive mail.
In addition, all those people and companies you have paid more than $600 to, immediately send a request for a W-9 with a deadline to reply. Do not send any payment to them until they comply (if you can avoid it) and then send them a 1099 as required by Jan 31st.
I know, I know, many people you paid will resist this. Look to the IRS to see how to deal with this.
Also, I know, many workers will still demand cash only. This has been going on for a long time.
When you comply and pay cash, the govt considers this defrauding them and if/when they catch you, they will make it hurt. Of course, the person who gets the cash could care less.
We sometimes ask, why is everyone charging so much? Well,when the govt takes about 40 percent, insurance takes another big bite, state taxes, sales taxes, property taxes, gas taxes and more what's left to spend on out families? I can only think we will see even higher taxes and more and more enforcement and penalties.
Next they will have other taxes as well, lots of them. --75.7.xx.xx
New Important 1099 Info (by 6x6 [TN]) Posted on: Dec 17, 2021 7:15 PM
Thank you for sharing.
I wonder if this would apply to people who only have one rental, no business name, and do most of the work themselves?
I did have a waterline replaced in the ground this year. --73.120.xx.xxx
New Important 1099 Info (by Lana [IN]) Posted on: Dec 17, 2021 8:23 PM
Good info. Thanks --216.23.xxx.xx
New Important 1099 Info (by plenty [MO]) Posted on: Dec 17, 2021 8:26 PM
Thanks for sharing all this. --172.58.xxx.xxx
New Important 1099 Info (by Still Learning [MH]) Posted on: Dec 17, 2021 10:10 PM
Do you know if venmo is reporting similar to credit cards? I have the w9 but paid via venmo. I havenít researched whether reporting is by my LLC or venmo. --75.67.xxx.xxx
New Important 1099 Info (by Richard [MI]) Posted on: Dec 17, 2021 10:59 PM
I would think the answer is yes to that question.
The other ones will be doing it. Why would they leave that one out?
I'd go to the IRS website and check or maybe ask your accountant. --75.7.xx.xx
New Important 1099 Info (by BRAD 20,000 [IN]) Posted on: Dec 18, 2021 12:39 AM
Tip: it mist be on their special computer readable form ONLY which I THINK is free if you order from IRS or buy at Samís club $19.95 for 40 forms.
New Important 1099 Info (by Robert J [CA]) Posted on: Dec 18, 2021 7:03 AM
Thank you for your update and great explination of the whole mess. --47.155.xx.xxx
New Important 1099 Info (by Dave [MO]) Posted on: Dec 18, 2021 7:21 AM
WMH, thanks for your helpful information about sending out the 1099-NEC. form Instead of the 1099-MISC. --174.202.xxx.xx
New Important 1099 Info (by WMH [NC]) Posted on: Dec 18, 2021 8:51 AM
Brad, note this:
"Filings must be generated with approved software and most must be filed electronically. Non-compliant forms (e.g. - hand-written) & filings may give rise to audits and penalties." --108.56.xxx.xx
New Important 1099 Info (by S i d [MO]) Posted on: Dec 18, 2021 9:54 AM
Our Past: "Welcome to America, the land of freedom and opportunity."
Today: "Hi, I'm from the IRS. I'm here to make your life miserable." --108.230.xxx.xx
New Important 1099 Info (by WMH [NC]) Posted on: Dec 18, 2021 5:59 PM
All the political answers aside, this is important factual info we all need. If you have questions about your specifics, consult your accountant. --50.82.xxx.xxx
New Important 1099 Info (by WMH [NC]) Posted on: Dec 19, 2021 10:46 AM
Richard, the law says "a business or trade" must file 1099s when they pay contractors, not individuals such as a tenant. If everyone who paid anyone more than $600 had to file it would be a paperwork (and security) nightmare.
We do sometimes get W-9s after the job is done, before payment of the invoice. --50.82.xxx.xxx
New Important 1099 Info (by don [PA]) Posted on: Dec 20, 2021 4:17 AM
Gee, I wonder how all the businesses that employ illegal aliens with no ss numbers are gonna survive these big penalties????? --73.141.xxx.xxx
New Important 1099 Info (by Marv [IL]) Posted on: Dec 20, 2021 8:29 AM
WMH - yes this rule only applies to businesses. And renting residential property is considered an investment activity by the IRS not a business. If it was a business landlords would have to pay Social Security on their profits. --67.184.xxx.xxx
New Important 1099 Info (by myob [GA]) Posted on: Dec 20, 2021 10:48 AM
whats changed from last year? this was ALL required. --99.103.xxx.xxx
New Important 1099 Info (by Jim [OH]) Posted on: Dec 20, 2021 6:25 PM
All this time I thought you were not reactionary. Too sad. I think you should have just sat on this info, digested it's importance, and then filed it into the file thirteen cabinet.
I believe your accountant was doing their due diligence to protect their credentials. Your reaction is not what I believe they thought you would have.
My opinion. --184.57.xxx.xx
New Important 1099 Info (by Busy [WI]) Posted on: Dec 20, 2021 7:02 PM
Residential real estate CAN be a business. No, doesnít need schedule C, or social security taxes. ( Though landlords who donít have any previous vesting in social security system should of course plan. But, then so should anyone/ everyone.)
In order to take the home office tax deduction, the rentals have to qualify as a business, and the home office deduction cannot be more than the profit that year. Home office deduction can be carried forward to future years when there is more profit. Because I qualify for the home office deduction, I can start and end my mileage at home. And rightly so; I often spend an hour gathering supplies, cutting lumber and loading my work vehicle at the start of the day, and ten minutes to half an hour after returning to my home office to unload, clean tools, put supplies back. And some days, even more. And, of course, my most important business, collecting rents, writing rent receipts, writing late notices, screening tenants occurs in the home office.
Mileage, deductible mileage, continues to be the largest single item on my Schedule E. So, qualifying for Home Office deduction is important to me. If I didnít qualify for home office, the first and last trip of the day would be commuting, and not deductible. So, yeah, having rental can be considered a business.
And, yep, landlords are required to submit 1099s.
I havenít gotten to the 1099 section yet, but, so far this yearís edition of NOLO publishersí Every Landlordís Tax Deduction Guide is probably a good place to look, if you donít rely on a trained tax professional ( and, even if you do.) --70.92.xxx.xxx
New Important 1099 Info (by Marv [IL]) Posted on: Dec 21, 2021 8:18 AM
I have always asked landlords on this site to let me know if anyone has been audited. If so did they check for 1099s. No one has ever said they did. I have also never seen a case in court amount landlords and 1099s. --67.184.xxx.xxx
New Important 1099 Info (by Busy [WI]) Posted on: Dec 21, 2021 3:06 PM
Marc, thatís probably the best observation! --172.58.xxx.xxx
New Important 1099 Info (by Busy [WI]) Posted on: Dec 21, 2021 3:07 PM
V not C. Sorry about the autocorrect. --172.58.xxx.xxx
New Important 1099 Info (by Busy [WI]) Posted on: Jan 4, 2022 2:00 PM
Reading further in the book I recommend, came across some answers to questions posited here.
In the past, Form 1099-Misc was filed to independent contractors ( IC). The Tax Cuts and Jobs Act created 1099-NEC, to be used for payments made to IC.
I didnít see in the text what the difference is, BUT, I know when a rent-assistance agency paid a tenantís rent one time, the agency sent a 1099-MISC. when I ran that through tax software, it put that income as page one income, not on the Schedule E. Perhaps the 1099-NEC somehow tells Uncle Samís minions that this goes against Schedule C or E income. In other words, compare the two ( 1099-NEC vs Schedle E, or 1099-NEC vs Schedule C.) in other, other words, make sure this is in that tax return on the C or E. This leaves 1099-Misc for truly miscellaneous items, like forgiving a tenantís debt, or other one-offs. My take on this. Perhaps others know where their 1099-NECís received last year ended up on the tax forms.
ď This requirement applies only to landlords whose rental activities qualify as a business for tax purposes.Ē (Stephen Fishman, JD. , NOLO Publishers, 17th Ed, pg 286. )
Reporting is required for services of doctors or lawyers, even if practitioner is in Corporation. Not if itís personal use, and Iím assuming not if landlord is classified as investor. Landlords classified as business need to report on doctors, lawyers, regardless of business entity of the doctor or lawyer.
$500 fine for willfully not filing 1099-NEC, per occurrence. --70.92.xxx.xxx
New Important 1099 Info (by KeyBoy [NJ]) Posted on: Jan 21, 2022 2:11 PM
From the instructions on the 1099-MISC and 1099-NEC it says only "Trades and Businesses" have to submit them.
From the research I have read on multiple tax forums and things written by CPA's etc the vast majority of landlords do not need to issue any 1099s to anyone even if above $600 was paid.
They tried to change the law in 2011 to begin making landlords issue 1099s but Congress and Obama agreed to keep the rules as they were exempting landlords from this burdensome paperwork. So it was repealed in 2011.
A residential tenant would not issue 1099 to a landlord because they are not a "trade or business". However a contractor who does operate a trade or business like a plumber who rents a building for his office or a restaurant operator would issue the 1099 to his landlord to show they paid rent in their business expenses and to whom.
New Important 1099 Info (by KeyBoy [NJ]) Posted on: Jan 21, 2022 2:16 PM
Rental Property Owners Get Relief from 1099 Reporting Requirements
Thomas F. Scanlon, CPA, CFP
Originally under the Small Business Jobs Act, those who received rental income from real estate were going to be considered to be engaged in a business, and were going to be subject to the requirements to issue 1099 information returns.
This act was going to make owners of rental properties report payments totaling $600 or more during the course of the year for any expenses relating to these properties.
The provision required even the smallest property owners Ē those who might just be renting out a second home or other rental property Ē to track any work done for them that totals $600 a year or more over the course of a year and to send any vendors whose work reaches that amount an IRS Form 1099, so they can report the income to the federal government. Examples of possible 1099-MISC recipients would include: gardeners, landscapers, contractors, property managers and repair services.
When the provision was included in the small business bill, realtors were among the first opponents of it, and worked to ensure that Congress understood the provision was an example of over-reach that would burden mom and pop property owners with extensive record keeping and paperwork.
Members of Congress and President Obama got the message and, in a rare example of agreement between Republicans, and Democrats, lawmakers agreed the provision needed to come out.
This expanded requirement for Rental Property Owners was repealed in May of 2011.
Thomas F. Scanlon, CPA, CFP is with Borgida & Company, P.C., Certified Public Accountants in Manchester, Connecticut, celebrating 44 years of tax, advisory and accounting services. --100.8.xx.xxx
New Important 1099 Info (by KeyBoy [NJ]) Posted on: Jan 21, 2022 4:02 PM
This was posted on TurboTax discussion forums
June 3, 2019 12:30 PM
If you are an individual property owner with rental properties you donít have to issue a 1099 under the current law.
The general rule is that if you are in a trade or business you need to issue a 1099-MISC to self-employed individuals if you pay them $600 or more in a given calendar year for services.
If you are in a trade or business, you do have to issue a 1099-MISC to self-employed handymen, gardeners, and tax preparers. The rule is you need to get the Tax Identification Number or Social Security number by handing them a form W-9 to fill out and give back to you. This form will provide the information you will need to issue a 1099-MISC at the end of the year.
In terms of current rules the real issue is whether you, as a rental property owner ,are considered to be in a trade or business.
If you own a couple of properties as an individual you are not considered to be in a trade or business for the purposes of this law so you donít need to issue 1099 to your handyman. If you and your spouse own the property together you donít have to issue a 1099.
If you own the property in an LLC where you are the sole owners the LLC is disregarded and you donít have to issue 1099s.
If you own the property in a partnership or corporation with partners other than your spouse you are deemed to be in a trade or business and the entity needs to issue 1099s if you reach the $600 or greater threshold in terms of payment to a contractor.
If you are the property manager that manages other ownersí properties you are required to issue 1099s as you are in the trade or business of property management. --100.8.xx.xxx
New Important 1099 Info (by WMH [NC]) Posted on: Jan 21, 2022 5:18 PM
If you are claiming "Real Estate Professional" status, then you must file 1099's.
If you have a W-2 job, you probably can't/don't claim this status.
If your JOB is landlording, you probably do (or should if you don't.) This means you can write off more than the 25K imposed on those who are NOT REPros.
SO examine your status and ask your CPA.
If you own one duplex, nothing to worry about. If you own multiple houses and do landlording as a full time job, you need to think about it. --50.82.xxx.xxx