1099 Rules for Landlords and Small Businesses

1099 Rules for Landlords and Small Businesses


Are you confused about the rules for small businesses and landlords issuing 1099’s for anyone that they’ve paid over $600 to?  Has a company asked you to fill out a W9 form because you or your business is doing some kind of work for them?  It seems like everybody is a bit confused, even the IRS.  But here’s help.


The rules have changed several times since the original post. If you’re preparing 1099s or tax returns for tax year 2016–these are the updated rules.


The  1099 law is actually part of the Affordable Care Act although it has nothing to do with health care.  Is your head spinning yet?  Seriously, the 1099 law states that businesses will be required to issue 1099 forms to contractors that they have paid over $600 to.


So who gets a 1099 MISC?  Basically, if you own a business, or are a landlord, you need to issue a 1099-MISC to anyone  that you’ve paid over $600 to for labor.  So, let’s say you pay a computer programmer to set up your office system – you’d issue a 1099 MISC.  But if you buy a computer for $1000 – then you don’t.  Confused yet?


Okay, here’s another situation – you issue a 1099 MISC to individuals and LLCs, but not to corporations.  So, let’s say Roberg Tax Solutions prepares your business tax return for $800.  Roberg Tax Solutions is an LLC, so you think okay, I’ve got to issue a 1099 – BUT, Roberg Tax Solutions has elected to be taxed as an S Corporation.  Say what?  Now you don’t have to issue me a 1099.  How do you keep track of that?  By looking at the W9.  Make sure all contractors you work with complete a W9 form.  It will tell you if they are a corporation or not.


If you need to prepare 1099s, here’s a link that will give you information on how to do it: How to Prepare a 1099


If you’re a landlord or small business owner you should expect that you will need to file 1099 forms for your contract laborers this year.  Start collecting information from them now so that you’ll be prepared come January.  You’ll need a W9 form, here’s a link:  W9


Print it out and have all of your vendors sign one.  You can be hard-nosed about this too.  No W9, no payment.  It’s that easy.


If a business that you provide a product or service to asks you to complete a W9 form, it is a legitimate request.  If you’re a sole proprietor and don’t have an EIN number, you may want to apply for one so that you’re not giving out your social security number all over the place.  If you’d like more information on EIN numbers, read my other post:  Free EIN


You can get an EIN number directly from the IRS for free.


One question that I’m always asked is, “Is there any way to get out of having to issue a 1099?”  The answer is, “Yes.”  If you pay a vendor with a credit or debit card, you do not have to issue a 1099.  The reason is, when you use a credit card to pay a vendor, the credit card company will be issuing a 1099K statement showing the payment you made.  So, it you want to reduce the 1099s you have to issue, use your credit card more often.



305 thoughts on “1099 Rules for Landlords and Small Businesses

  1. Hi Tiffany,
    So, your invoice doesn’t meet IRS guidelines? Golly gee, I didn’t know that the IRS had guidelines for invoices. There’s a very technical accounting term that we use around the office for matters like this. The term is BULLS*IT.

    Seriously? You have a lease addendum that clearly states the terms and he’s not honoring it? I used to live in Texas, it can be pretty hot – and with no AC – it can be really nasty! And lets be real $60 is not going to be luxury digs!

    I’m thinking that you don’t need a tax person, you need a lawyer. You’ll want to ask about reducing the rent that you pay by the $60 a day that you’re owed. Is it legal to do that in your town/state whatever? That’s out of my area of expertise, but that’s the question I’d be asking your attorney.

    I’m so sorry that you’re having to deal with this. Good luck!

  2. Can I 1099 renters that refused to put utilities in their name. They also didnt give me the agreed deposit. In 3 1/2 months wrecked a hoise that was on the market. They lied and sgowed false documentation thar they were going to buy it. Also wrecked brand new appliances. Put AC as high as they could left every light om 24-7 and 3 flood lights at night. They were nasty to me and made false police reports. Luckily I am smart enough to have witnesses. for all dealings. They are on drugs and somehow seems the courts let them get away with what I call rape. I am so brioke paying their bills. Help me with advice.

  3. Hi Joan,
    I think what you need is an attorney, not a tax person here. You get to write off the utilities as a business expense anyway, so issuing a 1099 to them doesn’t really help you. But an attorney can help you evict these deadbeats, that sounds like that’s what you need. Good luck!

  4. My company rents homes for people who have suffered fires, or another loss to their permanent home. We typically get a W9 from the landlord and will send them a 1099 at the end of the year. However, we’ve been told by a realtor that Landlords in texas don’t have to be 1099ed for the first two years that they are landlords. Is this accurate?

  5. Hi Alanna,
    I’ve never heard of that, but I don’t live in Texas anymore. That said, issuing 1099s is a federal requirement, and federal law supercedes state law so I’d issue the 1099s anyway. I would prefer to err on the side of caution. The realtor said that Texas landlords don’t “need” to be 1099’d, but didn’t say that it was against the law to issue them.
    Okay, forget being polite, I’m going to go out on a limb here – I think that realtor is full of horse hockey! But if she can pull the IRS regs that say Texas landlords are exempt for 1099s – I’ll apologize.

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