1099 Rules for Landlords and Small Businesses

January 12, 2011 by Jan Roberg
Filed under: Small Business, Uncategorized 
new laws about 1099s and W9s

Do the new tax laws make you feel like this?

Are you confused about the new rules about small businesses 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.

UPDATED JANUARY 2014
The rules have changed several times since the original post. If you’re preparing 1099s or tax returns for tax year 2013–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 new 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?   The law started out requiring you to issue a 1099 to anyone, including corporations that you paid over $600.  But there was a lot of backlash over that so you don’t have to issue a 1099 to a corporation now.  This eliminates a lot of 1099s!  This is great news for me because otherwise I’d be issuing 1099s to AT&T, Office Depot, my software company, my landlord, the gas station, and a dozen other businesses.  Now, at least this year, I don’t have to issue any 1099s because everyone I pay is either on my payroll, a corporation, or I paid them under $600.

 

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:  http://www.irs.gov/pub/irs-pdf/fw9.pdf

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:  http://robergtaxsolutions.com/2010/11/how-to-get-an-ein-number-for-your-business-for-free/

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.

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Comments

243 Comments on 1099 Rules for Landlords and Small Businesses

  1. Jan Roberg on Fri, 14th Jan 2011 3:19 am
  2. I just took an IRS update class and the latest is that you don’t have to issue a 1099 to a corporation for 2011 and you won’t have to issue a 1099 for products–only services. Also, credit cards and PayPal will be required to issue forms for their transactions, therefore, you won’t have to issue a 1099 for services that you paid for with a credit card or PayPal.

  3. John Hackberry on Tue, 18th Jan 2011 6:13 pm
  4. For a sole-proprietor, who files a single tax return, does this apply to personal-use services? For example, will I need to provide & file a 1099 to Verizon for my home cable TV service? Or, would it only apply to those services expenses against my business income?

  5. Jan Roberg on Tue, 18th Jan 2011 7:22 pm
  6. Jack,
    No. You won’t have to provide a 1099 to Verizon for your home cable TV service. (Please, don’t give the IRS any ideas!) That’s actually a very good question though. But no, you won’t have to issue 1099s for your personal services right now nor in the near future. Also, because Verizon is a corporation, even if you were providing cable to your tenants then you wouldn’t have to provide Verizon with a 1099 at this time. I suspect that this might be changing in the future, but for 2011 you wouldn’t have to.

  7. barry on Thu, 20th Jan 2011 7:15 pm
  8. i am a individual who owns a commercial rental property, my tenant (a business) informed me today that his accountant told him that i need to provide him with a w-9 for the 2010 tax year. is this correct?

  9. Jan Roberg on Thu, 20th Jan 2011 9:03 pm
  10. Hi Barry, Thanks for your question.
    Technically, small businesses are not going to have to require W-9s and issue 1099s in 2011 for companies. That was an issue that Congress did a flip flop on. Small businesses got out of it, landlords didn’t. That said, many businesses are gearing up and preparing for having to issue 1099s anyway. One of my clients forwarded me a memo from his company (a major US corporation) saying that they wanted W9s from all vendors this year. So even though many businesses won’t be required to issue 1099s for 2011, I think they’re planning on doing it anyway.
    One thing that’s confusing in your case is because you’re an individual. A company is supposed to issue 1099s to individuals if they’ve been paid over $600. I’m thinking that you probably should just complete the W9 and expect to receive a 1099 from the tenant for 2010. Usually, we’re talking about 1099s for services, but many companies do issue 1099s to their landlord also.
    The accountant and the tenant are covering their behinds and you can’t blame them. If the IRS decides that they should have sent you a 1099, the fine is $100 to the IRS plus $100 to you.
    One thing to remember when you’re reporting your income: Let’s say that for the year you received $1,000 in rental income. (I like easy numbers.) And your tenant gives you a 1099 for his rent, that amounts to $100. When you report your income, you’ll still only report $1,000 but you’ll have a line for income reported on 1099s and another for income not reported on 1099s. You’ll want to make it easy for the IRS to link the 1099s you received to the income on your tax statement, but you don’t want to forget to reduce your “non-1099″ income by what’s listed on the 1099s. You don’t want to accidentally overreport your income.
    Bottom line: sign the W9. If you don’t have an EIN number, you should get one so that you’re not giving out your social security number. I have instructions on my website: http://robergtaxsolutions.com/2010/11/how-to-get-an-ein-number-for-your-business-for-free/ It only takes about 5 minutes to do. I just had a client do it last week and she hates doing tax things and even she said it was easy. Good luck.

  11. barry on Thu, 20th Jan 2011 11:25 pm
  12. thanks for the answer, but can I get a EIN as an individual not a business? I have a trust and can deed the free and clear property this year into the trust (pay the 250 to deed both of the condo’s for the recording fees to the town hall) but that may not help me this year…again I dont want to give this person my SS, idenity theft is at an all time high and by giving a person your ss number along with your signature…well in laymans terms they can destory your credit by selling this info to someone who is a user of personal information…

  13. Jan Roberg on Fri, 21st Jan 2011 1:11 am
  14. You’re absolutely right about identity theft. You need to protect yourself. Yes, you can get an EIN as an individual. You will go into the IRS website and you’ll choose “sole proprietor” as your category. For EIN purposes, a “sole proprietor” is anyone who files a C, E, or F schedule with their tax return. Because you have a rental property, you’ll be filing a schedule E.
    Currently, there is no place on the schedule E for an EIN number. I suspect that because of these new tax rules, that will change. But your EIN number will be tied to your social security number and the IRS will be able to track your income.
    I tell everyone who has to issue 1099′s or W2s to use an EIN number. And quite frankly, with the new rules regarding 1099s, I’m recommending anyone who has to fill out a W9 to get an EIN number too.
    Don’t lose your EIN number. Make sure that you print out your EIN confirmation letter and keep it someplace safe. You’re going to be using it again I’m sure.

  15. Jan Roberg on Fri, 21st Jan 2011 6:16 pm
  16. Barry,
    One more thing that came to mind: When you do receive your 1099 from this tenant, make sure that the income you received from him is listed in box 1 for rents and not box 7-non-employee compensation. The IRS expects you to pay self employment tax on box 7 income, but you don’t pay self-employment on your rental income. I’ve seen a few folks get 1099s that were coded wrong.

  17. Chris on Mon, 31st Jan 2011 3:29 pm
  18. How will the 1099 rule work next year with respect to the home office type of deductions. In other words, will someone be issuing a 1099 to their mortgage company if they take a portion of their mortgage interest as a home office deduction? Most people don’t pay this via credit card but by check or on-line. That also doesn’t account for all the other deductions a home office worker will use – electricity, etc.

    What I find someone ironic is all of this, if the rules stay the same, is that it will drive more business to pay via credit card which will do a couple of things
    1) lessen the ability of vendors to negotiate on costs
    2) line credit card companies pockets in light of the recent Congressional action that was put in place to limit credit card fees and costs. Congress giveth and Cognress taketh away. In fact, small business will likely subsidize consumer purchases.

  19. Jan Roberg on Mon, 31st Jan 2011 8:31 pm
  20. Chris,
    I hadn’t even thought of home office deductions but you make a really good point. The whole thing is mind boggling. I do expect the 1099 rules to be relaxed a little bit, if not completely, with this session of Congress. Even president Obama mentioned relaxing the 1099 rules in his State of the Union Address so hopefully things will get straightened out.
    I find your point about credit card fees to be pretty interesting as well, especially form the standpoint that I am a small business service provider. I was thinking about getting rid of my credit card company as most of my clients pay by check anyway, but I think more business clients will use credit cards to pay me just to avoid having to write a 1099 for me. Ouch, just thinking about the cost is bugging me.
    Thanks for your thoughtful input. I will make a new post if I get any definite information about home office deductions and 1099s. For right now, I would guess that we’re okay with those for now until we hear a definitive statement from the IRS that says we have to issue 1099s for that too.

  21. Jan Roberg on Mon, 31st Jan 2011 10:29 pm
  22. Update on 1099s, I belong to an organization called the National Association of Enrolled Agents. They recently issued a letter to Dave Champ, Chairman and Sander Levin, Ranking Member of the House Ways and Means Committe regarding the 1099 issue for small businesses and for landlords. The NAEA take is that the requirements are too burdensome for taxpayers. Hopefully Congress will agree.

    http://www.naea.org/MemberPortal/Advocacy/Comments/Camp_Levin_Letter_01252011.htm

  23. Jan Roberg on Fri, 4th Feb 2011 11:24 pm
  24. The senate repealed the 1099 provision of the health care bill. I’m guessing we’re all off the hook for now. I will post any updates if they come up. Here’s a link to Senator McCaskill’s website about it: http://www.mccaskill.senate.gov/?p=press_release&id=1181

  25. Denko on Sat, 12th Feb 2011 9:45 pm
  26. Ok i have a body shop and a lady came to get an estimate i gave her an estimate on how much everything is going to be and she faxed it to her insurance. Her insurance called me saying they need a W9 Form faxed to them and they will make the payment to me so i can start working. Someone please help. Thank you.

  27. Denko on Sat, 12th Feb 2011 9:46 pm
  28. Ive never had to give one before so im confused? i tried filling out the W9 and it said it was to open a business

  29. Jan Roberg on Sun, 13th Feb 2011 3:19 am
  30. Hi Denko,
    I understand your confusion. Hopefully this will help. First, here’s the IRS website to get the W9, just to make sure you’ve got the right form. http://www.irs.gov/pub/irs-pdf/fw9.pdf
    You put all your information in the boxes and send it to the insurance company. They will use the W9 form to issue you a 1099 in January next year. The W9 isn’t to open a business, it’s to identify you as a person (or company) that will be doing service work. It’s normal for the insurance company to ask you to fill out the form.

    Now, here’s another possible issue for you. It sounds to me like you own your own business. If you have an EIN number, then that’s the number you put in part 1, the taxpayer identification number. (EIN stands for Employer Identification Number, you don’t need to be an employer to get an EIN anymore.) If you don’t have an EIN number, then you can use your social security number.

    But, I don’t like using a social security number because of all the identity theft creeps out there. You’re probably okay giving your SS# to an insurance company, but you’re going to get asked to fill out more W9s in the future. I’d go ahead and get the EIN number now. It doesn’t cost anything and it takes about 5-10 minutes. Here’s a link to a different post I did about how to do it. http://robergtaxsolutions.com/2010/11/how-to-get-an-ein-number-for-your-business-for-free/

    There are people who have owned their businesses for several years and never had to get an EIN before. It hasn’t been an issue. But now, with all this “reporting” going on, I recommend getting an EIN for your own protection. Make sure you have access to a printer when you do it because you’re going to want to print out the form–or at least write down the number.

    When I say it will take you less than 10 minutes, I’m not exaggerating. It’s an interview style format, you just answer the questions and it will guide you to the right sections. It’s not open 24 hours a day so be sure to check the times at the website. Good luck.

  31. Ken on Mon, 21st Feb 2011 9:45 pm
  32. Could you tell me, for purposes of the newly revised 1099 reporting requirements for landlords, what qualifies as being a landlord. If you have one rental property? Make your living by being a landlord? Own one 8 unit apartment building but have a full time job in another field?
    Thanks.

  33. Jan Roberg on Tue, 22nd Feb 2011 2:42 am
  34. Hi Ken,
    You ask a really good question. You probably don’t even realize just how good of a question that is. But seriously, what really does constitute a landlord? Is it the guy who couldn’t sell his house when he moved and became a landlord by default? Or do you have to own a couple of rental units to be a landlord? Where do you draw the line?
    To be honest, I think there will be some legislation about that coming from Congress. But for now, I wouldn’t hold my breath. Bottom line, assume that anyone filing a schedule E with rental income on it will be considered to be a landlord as far as the reporting requirements are concerned.
    That said, I do expect something to happen in Congress. I know that Senator Olympia Snowe offered up legislation to help ease the burden on landlords, but they didn’t let it out of committee. I don’t know what might be coming.
    When I get a definitive update, I will post it here. Thanks for your question, sorry I don’t have a better answer for you.

  35. Vicki Short on Tue, 1st Mar 2011 5:55 pm
  36. I just recently wrote my representative because our family are truckers. We are owner-operators, a one truck business. So if this passes, the 1099 bill, I guess we are expected to generate 1099′s to every truck stop we buy fuel from and every tire company we get tires from if we spend in excess of $600. Is that right? This is ridiculous. Can you imagine the number of 1099′s I’ll have to make up since my husband visits hundreds in a years time? Plus we already get 1099′s from brokers we do business with so does that work vice versa too? A stupid, stupid bill.

  37. Admin Roberg on Wed, 2nd Mar 2011 2:34 am
  38. I agree with you completely. I think that having to write 1099s for every vendor you use could be a royal pain. Congress keeps saying they’re going to do something about it, but it never seems to get anywhere.

    Here’s a tip for you though: Use credit or debit cards on the road. According to the IRS, since the credit card companies will be required to prepared information documents as well, if you pay vendors with a credit card, that exempts you from having to prepare a 1099. It won’t solve all of your 1099 problems, but it will certainly eliminate a large number of them.

  39. Vicki Short on Wed, 2nd Mar 2011 11:27 am
  40. Thank you very much for that tip Admin. Roberg. We DO pay for all our fuel with credit cards now. Before, we paid cash but since diesel fuel rose so high starting with the 90′s and is still rising, I am afraid for my husband to have to keep that much cash on him. So we do that. That would be a GREAT thing if all the fuel by per truckstop if paid by credit card were exempt. Thanks!!

    The OOIDA has written a letter to Congress trying to get all our resprestatives to repeal this bill. I never knew it was snunk in along with the Healthcare bill. Very sneaky. I also wrote to mine too telling him what a hardship this would bring to all sole proprietors and small businesses. We’re just the little people trying to make a living.

  41. Vicki Short on Thu, 3rd Mar 2011 12:00 am
  42. I’m not sure but it looks like the bill has been repealed but it talks about only landlords. I thought this 1099 bill-Small Business Paperwork Mandate Elmination Act was directed to all people in business that spent in excess of $600 a year to vendors? But all I can find is where it was repealed for landlords. So where does this leave the rest of us? Do you know?

  43. Jan Roberg on Sat, 5th Mar 2011 12:39 pm
  44. The House passed HR 4 to repeal the 1099 reporting requirements for small business and landlords. Now it goes to the Senate. The Senate had been working on a different bill. Nothiing’s law until the president signs it but it looks like we’re making progress. The attached website has more information.
    http://www.govtrack.us/congress/bill.xpd?bill=h112-4

  45. Admin Roberg on Sat, 2nd Apr 2011 2:54 pm
  46. Okay, that House Bill will be going up for a vote in the Senate on Tuesday, April 5th. It’s expected to pass and go to the President for signature. Here’s a link for more information. http://thehill.com/blogs/on-the-money/domestic-taxes/153205-senate-lines-up-1099-repeal-bill-for-tuesday

  47. Admin Roberg on Tue, 5th Apr 2011 10:58 pm
  48. Today, April 5, the Senate passed HR4 which repeals the increased reporting requirements for Landlords and small business owners. It’s now heading off to the President’s office for signature. This link is to the actual bill itself. http://www.gpo.gov/fdsys/pkg/BILLS-112hr4pcs/pdf/BILLS-112hr4pcs.pdf
    One of the issues is would the final bill include the landlord provision, and yes it does. If you go to page 2, and scroll down to section 3 (reference line 22) that’s where it talks about rental property expenses–so Landlords, you’re included! The President is expected to sign. I’ll post an update when we’ve got one.

  49. Jan Roberg on Fri, 15th Apr 2011 10:27 pm
  50. The 1099 bill repealing the requirments was signed into law on April 14th. Here’s the link: http://www.bloomberg.com/news/2011-04-14/obama-signs-law-repealing-business-tax-reporting-mandate-1-.html

  51. Narisa on Tue, 4th Oct 2011 8:13 am
  52. I have a lanlord that.don’t have ge license is that ok or can they get penalty? Thank u

  53. Jan Roberg on Tue, 4th Oct 2011 3:35 pm
  54. Hi Narisa,
    I honestly don’t know the answer to that question. Here in Missouri, we don’t charge excise taxes on apartment rentals so that wouldn’t be a problem here. I know that Hawaii is a state that uses the GE tax license, but even threre I don’t know if it applies to apartment mangers or not. Sorry I couldn’t help you.

  55. Chris Muflord on Fri, 11th Nov 2011 7:15 pm
  56. Jan-

    I accidentally came across your website and I am glad I did!

    My TENANT is asking ME (The LANDLORD) for a W-9 for the rent payments she paid me. She runs a business from her home and wants me to fill out a W-9 with MY information on it for her accountant.

    She claims her accountant is correct in asking for this. What do you think her accountant is thinking? And what do you suggest I say to her accountant to get this straightened out?

    Thanks for any insight you may have! I will look forward to your reply!

  57. Jan Roberg on Fri, 11th Nov 2011 7:52 pm
  58. Hi Chris,
    Thank you for your question. You do not have to complete a W9 for your tenant and your tenant does not have to give you a 1099 for the rent on her personal residence.
    Forgive me for going snarky on you but What the ##&% is wrong with that accountant? Okay, I’ll try to go back to being nice me again. I’m assuming that the accountant has misinterpreted some of the rulings concerning 1099 reporting and that’s why he’s off base. Because your tenant has a personal residence in your building, and is renting from you as an individual and not as a business, then there is no W9 requirement whatsover. You are not contract labor to your tenant. That’s the law, that’s my answer and I stick by it.
    Why am I snarky over the accountant? Because, having you prepare a W9 so that your tenant can send you a 1099 for her rent–besides being technically wrong, is leaning towards “illegal” reporting and that’s what has me cheesed off. When a person claims a home office, they deduct a portion–key word here is “portion” of their rent used for the home office. It goes on a form 8829 and the pro-rated share of rent and other expenses are deducted on that form. Also, if the business is running at a loss, the home office deduction is limited. (Sorry if I’m getting too technical.)
    But, if your tenant issues you a 1099 then she counts the rent as a 100% business expense. In that case the loss isn’t limited and she’s getting a full write off for something that should be a portion of her business. But that’s not a fair, accurate, or legal deduction.
    This is leaving me with two conclusions: either the accountant is dumb or crooked.
    Sorry, I’m usually not so judgmental. As an ex-landlord myself, I’d be tempted to issue an eviction notice on the grounds that your tenant is not allowed to run a commercial establishment in a residential building. Clearly, the only reason for you to complete a W9 would be if you were indeed in the business of leasing out a commerical property to businesses.

  59. Chris Muflord on Fri, 11th Nov 2011 8:48 pm
  60. Jan-

    Thank you so much for confirming my “gut reaction” to this situation.

    She has been an awesome tenant; paid on time, done minor repairs herself, kept up the property, etc. The lease IS set up with her as an individual with a clause excluding running a business from the property. We have overlooked that for a number of reasons. It is a “low-traffic” business and it does provide her with the income that pays the rent!

    Thanks again for your clear and insightful help with this issue! You have given me the ammo to go forward and resolve this without being party to potentially fraudulent activity.

  61. Adena on Mon, 19th Dec 2011 6:51 pm
  62. Ok, so let me just clarify what I understand to be true.

    1. I must require a W9 from EVERY vendor we do business with daily with exception to the ones we pay by Credit or Debit card.

    2. I must issue a 1099 to EVERY vendor we do business with for which we paid $600+ for any and all products or services (except those paid by CC or DC).

    3. This begins 2012 tax year.

  63. Adena on Mon, 19th Dec 2011 7:15 pm
  64. Also, what about owners/ managers expenses? They are acquired by the managers/ owners using their own CC/ DC but reimbursed by the company by either check or cash.

  65. Jan Roberg on Mon, 19th Dec 2011 8:16 pm
  66. Hi Adena,
    Good question, mostly because everyone is confused still! This link: http://www.bloomberg.com/news/2011-04-14/obama-signs-law-repealing-business-tax-reporting-mandate-1-.html talks about how the law requiring 1099s for everyone was repealed last April. Now you know Congress, they can change their mind, but I think you’re safe for 2012 at least.
    You will not be required to get a W-9 from every vendor, only the individuals. For example: if you shop at 7-11 for your business, you don’t need a W9 from them (7-11? how lame, first thing that popped into my head.) But say you hired Jill Smith to do some contract work for you, then you’d still need the W9 and you’d issue a 1099 to her if she earned over $600 from you.
    Now as far as the owners/managers expenses that you are reimbursing–that’s different. you’re not paying them for something, it’s a reimbursement check and you don’t need to issue a 1099 for that.
    Hope that helps. Have a great 2012!

  67. Adena on Tue, 20th Dec 2011 2:15 pm
  68. Perfect! Just as I figured. Thank you confirming my suspicions, Jan!
    Happy Holidays to you as well!

  69. charlotte on Tue, 10th Jan 2012 1:40 pm
  70. Hello, my husband and I are self employed. We bought a franchise last year. We are paid with automatiac deposit direct into out Business account. We filled out a w9 form and we do not receive a check in our name, only paid to our business name, why is the corporate office reporting to irs with a 1099 ? We did not receive a 1099 from the corporate office to file on our last years taxes. Confused.

  71. Admin Roberg on Tue, 10th Jan 2012 2:00 pm
  72. Hi Charlotte,
    It’s proper that you received a 1099 from the corporate office. I’m guessing that you’re a sole proprietor and that you made over $600 this year. If that’s the case, then the corporate office is required by law to issue you a 1099 MISC form. If you didn’t receive a 1099 last year, it could be that you made less than $600 or it could be an “oopsie”. But the IRS has really cracked down on 1099s so there will be fewer “oopsies” out there.
    One helpful hint when doing your schedule C–make line items for all of your 1099 MISC forms. For example: let’s say your total income was $5000. You got a 1099MISC from Big Company for $2500, and a 1099MISC from little company for $1000 and you recieved another $1500 from other miscellaneous sources.
    Your tax return should have:
    1099MISC Big Company 2500
    1099MISC little company 1000
    Other income 1500

    Most software programs will have a place to enter your 1099s separately, but if you don’t have that, do use the line items. The IRS gets those 1099s and you want them to be able to recognize that you reported that income. Listing it out may save you an audit letter.

  73. Anne on Thu, 12th Jan 2012 12:58 pm
  74. We inherited some pasture land this year and received some rental money for it. The person who was renting it this year will not be renting it next year because we do not trust them. They run a small dairy so I’m assuming that is a business. They have asked for a social security number for a 1099. Do they need to give us a 1099? Also, because of this pasture land, do we qualify to get an EIN number?

  75. Admin Roberg on Thu, 12th Jan 2012 3:35 pm
  76. Hi Anne,
    Thanks for your question, I’m getting a lot of phone calls on that too. I just sat through two different classes that kind of had different answers on that issue—so I’m going to take the more conservative route. If I were the accountant for the dairy, I’ll tell them to issue you a 1099 for the land that you lease them.
    But I’m talking to you—and I’m advising you not give them your social security number—especially since you said that you don’t trust them. I wouldn’t do it even if you did trust them. You should definitely get an EIN number. Here’s a link with some information on that: http://robergtaxsolutions.com/2010/11/how-to-get-an-ein-number-for-your-business-for-free/
    That’s one of my posts but there are links to take you to the IRS website. It’s free, it’s fairly easy, and shouldn’t take you very long to do. Where it asks for the category—you’ll say other and if you’re supposed to fill in the blank say rental real estate. You can do it online.
    Now when you get your 1099 from the dairy, make sure that the money they paid you is in box 1 for rent and not box 7 which is non-employee compensation. (I see a lot of mistakes like that.) Money in box 7 is taxed at a higher rate and that’s not your situation, yours is rental income.
    But the bottom line is, I think the 1099 is okay in this situation and having the EIN number protects your identity. You’ll use it from now on for that rental property, so don’t lose it.

  77. Amy W on Sat, 14th Jan 2012 12:09 am
  78. Hi,

    I have a question regarding 1099 reporting for an owner/operator of a single auto trasport truck. My husband and I own an auto transport truck. He is leased onto a company that by contract has exclusive use of our equipment and my husband is contracted as its driver. Recently they began paying him both a 1099 percentage and a W4 percentage. For example, if he were to gross $10,000, the company takes 20%, netting him $8,000. They would then calculate 10% of the $10,000, or $1,000 and deduct that fromt he $8,000. We would receive $7,000 net 1099 income and $1,000 gross W4 income.

    In reading the IRS 1099-Misc instructions, I believe the 1099 income ($7,000 in the example above) would qualify as RENTS. This income was earned because the company contracted our equipment to do the job. The IRS instructions state “If the machine rental is part of a contract that also includes the use of the machine and the operator, the rental should be prorated between the rent of the machine (reported in box 1) and the operator’s charge (reported as nonemployee compensation in box 7)”.

    About 10 years ago my husband worked for a national transportation company for 5 years also as an owner operatoor with the same type of eguipment doing th eexact same type of work. They listed all 1099 income under Box 1 and he also received a W4 driver check based on a percentage of his weekly gross. We were never audited during that time and our accountant saw no issue iwht. Because it was not subject to self employment tax, it was also very beneficial to us.

    I’d like your opinion on how you think our 1099 income should be catagorized. Thank you.

  79. Jan Roberg on Sat, 14th Jan 2012 6:31 pm
  80. Hi Amy,
    Let me be 100% honest with you–I think you know more about this than I do. You’ve done your research and you have experience to back up your assumptions, so I think you know your stuff. My gut reaction is that the 1099 you receive should be for RENTS, and that your husband will receive a W2 for his wage portion of the work. At least that’s my gut reaction and I’m thinking that’s where you’re coming from too.
    Just to be safe though–there are tax firms that specialize in trucking–that’s all they do is tax returns for truckers. I would call one of them and just get a second opinion. I can say, “I think this is how it is,” but they’ll be able to tell you exactly how it goes and have some extra knowledge to add in there to boot. Sorry I couldn’t help.

  81. Lisa Gioia on Mon, 16th Jan 2012 8:54 pm
  82. I am a psychotherapist in private practice and have received this notification several times on a list serve and want to make sure that it is accurate?; from what I have been reading it appears that some changes have been delayed to tax year 2012. Thanks:

    2 VERY IMPORTANT TAX ISSUES FOR 2011

    #1—REPORTING OF FILING 1099s NOW MANDATORY

    Any taxpayer who owns a business and pays a total of $600 or more to an individual during the year for rent, contract services, consultation or any other service that is deducted as a business expense in 2011 must issue the provider of the service a 1099. This does not include payments made to corporations.

    The deadline for submitting the forms to recipients is January 31 and to the IRS by February 28th.

    The taxpayer will be required to indicate on the tax return whether they have filed the 1099s or not. There are significant penalties for not filing 1099s.

    #2—NEW INCOME REPORTING REQUIREMENTS FOR BUSINESSES THAT ACCEPT CREDIT CARDS

    The reporting of all business income in 2011 and beyond must now be separated between income received by credit card vs check or cash. This distinction will be required to be reported on the tax return. Taxpayers should adjust their bookkeeping practices to account for this requirement.

  83. Jan Roberg on Mon, 16th Jan 2012 10:16 pm
  84. Hi Lisa,
    You’re absolutely right–those changes have been delayed for 2012. Don’t be surprised if they get delayed again, but assume they will go into effect this year just to be safe.
    For now, the only 1099s that you need to be worried about are for payments that you made to independent contractors–if you hired any. All the other stuff has been postponed until next year.
    Just as a fair warning- you’ll see spaces for the 1099K credit card income on your tax return form. If you’re using computer software, you won’t be able to access it because you won’t be receiving any 1099k forms. (Or so we think anyway.) If you’re doing your return by hand–leave that line blank and put all of your income on the next line. (You’ll see what I’m talking about when you look at the tax return.)

  85. Lisa Gioia on Tue, 17th Jan 2012 1:28 am
  86. Thanks. I am just starting to accept credit payments for sessions via Square. In planning for how to list this in my 2012 record keeping, do I list the amount the client paid, and then show the percentage taken by Square as an expense – will my gross receipts reflect the session amount, or the reduced amount after Square fees? Hope my question makes sense. I use Excel to track everything. I assume with the new procedures they (credit card companies) will be producing some sort of tax form at year end showing the total amount charged minus their percentage? Just want to be keeping track correctly in my own record keeping as the year begins.

  87. Jan Roberg on Tue, 17th Jan 2012 2:13 am
  88. Hi Lisa,
    Your question makes perfect sense, and since I just finished an IRS webinar about that subject I feel ready to answer your question. (Sometimes timing really is everything!)
    Even though I’m an accountant, I like to keep the math simple (although it does scare my clients when I count on my fingers.) Let’s just say that one of your sessions costs $100 even. You bill your client $100, he pays you by credit card, and your credit card agency (in this case Square) bills you $5 for the privilege of using their service.
    In your accounting you will show $100 in revenue and $5 in expenses (for the credit card fees.)
    Now in your line of work, I don’t expect you to be offering cash back like they do at the grocery store, but if you did, let’s say your client pays you $100, wants $20 cash back, and you’ve got the $5 expense for the credit card service. You would get a statement from the credit card company showing revenue of $120–so you would have a line item expensing the cash back, and another line item for the $5 fee.
    So for your business Lisa, you should be okay–I’m thinking that your credit card revenues and income should match up without any problems and you’ll expense the credit card fees separately. Business owners who offer cash back, or have their customers charge tips could have some serious bookkeeping issues.
    The bottom line is that whatever is charged to the credit card will be counted as revenue to the business owner when the 1099k comes out. If the customer is charging things that are not income to you–you’ll have to account for it in your expenses.
    I hope I made that clear for you. It’s a great question.

  89. Anne on Tue, 17th Jan 2012 5:59 pm
  90. Thank you for your response to my previous question on January 12th about receiving rental money for pasture land. We applied and received an EIN number. (We did this by phone.) The dairies bookkeeper/accountant says that she got a message that the number is not currently issued. I asked if that is because it was recently issued. Her reply via email:
    “Since the EIN was just recently applied for, it would not be in the system yet. However, for reporting purposes for 2011 (the year the rent was paid) we would have to report that using his social security number. Also, if we report the rent being paid to an individual, the only number the IRS will allow is a social security number.”
    Her response is contrary to what you said about the EIN number being okay and we should not give them our social security number. Please help!

  91. Jan Roberg on Wed, 18th Jan 2012 1:58 am
  92. Anne,
    Sorry it’s taking me so long to get back to you–it’s been a busy day. I tried calling the IRS just now but their closed (they cut back their hours, I’m guessing due to budget cuts.)
    I understand you not being in the system yet–you just signed up. I’m not so sure about you not being allowed to have an EIN number–that doesn’t jive with me–especially with the IRS sending out massive warnings about identity theft (just got another one today.)
    I’ll try to have an answer for you by tomorrow or Thursday–don’t give your social security number to someone you don’t trust. I’m feeling something’s fishy, but I’ll admit it if I’m wrong.

  93. Jan Roberg on Wed, 18th Jan 2012 6:23 pm
  94. Okay Anne–I’ve got information for you!
    1. You EIN number is your EIN number and even if you got it yesterday, you may still use it for your 2011 taxes and that accountant should issue you your 1099 with the EIN number.
    2. Your EIN number is valid immediately after you receive it. (Like 5 minutes after you apply for it if you’re doing it online.)
    3. This is the part that I found very interesting–your EIN number is proprietary information. That accountant cannot call up the IRS and get EIN informaton on you without a power of attorney.
    4. This is also important–let’s say that you were the bad guy and you gave them a fake EIN (you wouldn’t, but if you were.) By signing the W9 form and giving it to them, that’s their proof that they have complied with the tax law (and that you were at fault.) So they’re protected no matter what.

    Bottom line–my advice still holds–don’t give them your social security number, use your EIN. Hang onto it because you’re going to use that from no on when dealing with things about that property.

    And thanks to S.A. at the IRS who wouldn’t let me use her name, but she was really helpful about a whole bunch of issues with 1099s and W9s.

  95. Anne on Thu, 19th Jan 2012 4:19 am
  96. Thanks so much for all the information!!!

  97. Jawanna on Wed, 25th Jan 2012 5:03 pm
  98. Good Afternoon,

    When filling out 1099′s as a property manager, what do I include as rents in box 1? Is it total income received from tenants or proceeds after deductions that went to owners?

    Thank you in advance…

  99. Jan Roberg on Thu, 26th Jan 2012 1:18 am
  100. Hi Jawanna,
    Thanks for posting your question. I keep getting asked that on the phone–thanks for giving me a chance to write about it.

    You don’t issue a 1099 to your tenants. You’re not paying them rent. It’s the other way around. Let’s say I was renting my office space from you and I was paying you $100 a month for my office. Then because I own a business I would write a 1099 to your with $1200 in box one.

    (Okay business owners–before you all jump on me–we don’t have to do that for 2011, that got changed as well.)

    One less papework job for you to handle!

    Now–I don’t know what state you’re in, but here in Missouri, landlords do give out statements of rent paid to tenants (or at least senior citizens and disabled people) so that they can claim their property tax credit. But that doesn’t go on a 1099.

    If you have to do something like that for your state, you’d be listing the total rent received.

  101. Becky on Thu, 26th Jan 2012 4:04 am
  102. If you are a cabinet component manufacturer, should you receive a 1099 for products sold to builders. For instance we build cabinet doors and sell them to a builder. Should this builder send us a 1099 for our business?

  103. Jan Roberg on Thu, 26th Jan 2012 2:59 pm
  104. Hi Becky,
    Good question. My gut reaction when you say “manufacturer” is that you’re a corporation and that no, you don’t need a 1099. But I’m finding that lots of small businesses are issuing 1099s to cover their butts with the IRS and I can’t blame them. I was just on the phone with the IRS last week about someone else’s 1099 issue and the IRS woman informed me that I should be handing out a W9 to all of my business clients that I’m preparing returns for so that they can issue me a 1099 in 2012. (So it looks like I’m going to be preparing 1099s to give to myself–weird.)
    Anyway, 1099s are definitely in all of our futures whether we like it or not.

  105. Matt on Fri, 27th Jan 2012 9:55 pm
  106. Hi Jan,
    I am paying office rent to an LLC, do I need to issue them a 1099 for 2011?

    Also, I occaisonally use their printers, and they bill me for that as well. For 2011, the total printing amount paid was just about $500. Do I need to add the rent (about $8,000) and the printing costs together, or do I put them in seperate boxes, or do I exclude the printing costs?

  107. Tom on Sat, 28th Jan 2012 7:41 pm
  108. What happens when a condo owner gets a reduction in rent because he is the resident manager which amounts to $1200/year. Should the condo association give him a 1099???
    thanks

  109. Admin Roberg on Sat, 28th Jan 2012 11:06 pm
  110. Hi Matt,
    I had my answer for you and then I decided to call the IRS, just to double check-because I was kind of shooting from the hip and I wanted to be sure. Well–the IRS gave me a completely different answer than what I was going to tell you–but then the person said, “You know, 1099s aren’t my department let me give you their number.” Okay–when I called the IRS, I specifically said that I had a 1099 question but–okay complaining doesn’t help.

    Anyway–the official phone number for 1099 questions is (866) 455-7438. The line is open from Monday through Friday 8:30 am to 4:30 pm Eastern Standard Time.

    Normally I would just get this answer myself and post it for you but you’ve got a deadline of Tuesday and I might not get through to the IRS by then. (For example, I called before 4pm–but since I was on hold for 45 minutes I guess they just forwarded their calls to the W2 department.)

    Anyway–my shoot from the hip answer was no. The IRS lady (in the W2 department) said yes you do. I was having trouble finding documentation to back up my answer (or hers) which is why I made the phone call in the first place.

    My logic was–you never had to before, and the 1099 rules basically went back to the way they used to be (with a few exceptions but your landlord wasn’t one of them.) The IRS lady (who specifically said she wasn’t up on 1099 rules) said yes you do have to because your landlord isn’t a corporation.

    If I get a definitive answer, I’ll post it. If you get one, please post it–lot’s of people want to know. The way I’m going right now is–when in doubt, issue a 1099. If the IRS gets more paperwork than they can deal with–it’s their problem for not making this issue clear. I get a little cranky when I can’t get a decent answer. Just remember I’m not cranky at you, you asked a good question.

  111. Admin Roberg on Sat, 28th Jan 2012 11:26 pm
  112. This is for Tom with the Condo Association–
    That’s a really good question. First–you’re a condo owner–so how is it you’re paying rent? That threw me off. I used to be in real estate long before I was preparing taxes and there are some very specific rules about rent reduction and wage income–what’s taxable and what isn’t.

    Given that you’re only getting a $1200 rent reduction–that’s probably in the taxable category (it looks like $100 a month–so that’s not very big so I’m guess the work you do is not what would be considered a full time job.)

    So, I guess, being technical, the condo association should give you a 1099 for the $1200. I would put it on a 1099B in box 14 for Barter because you didn’t really get cash, you got a rent reduction.

    I would say that you are not in the business of being the resident manager, is that a fair assessment of the situation? You’re just the guy who got voted on to be the contact person for the condo association when things needed fixing. I don’t think you should have to pay self employment tax on that money. If you get a 1099 MISC, the $1200 should not be self employment income (unless that’s really what you do for a living.) The $1200 should be listed in box 3, which is other income.

  113. Anita on Sun, 29th Jan 2012 1:37 am
  114. I understand the law was repealed for landlords having to file 1099 forms for property expenses for 2012 tax year (filing in 2013). However, from what I’ve read, this is required for the 2011 tax year (filing in 2012). Do I have this right?

  115. Admin Roberg on Sun, 29th Jan 2012 1:22 pm
  116. Hi Anita,
    No, you’re backwards. You will have to file 1099 forms for tax year 2012 filing in 2013 but not for tax year 2011 filing in 2012.

    I don’t mean that you’re backwards, just that you got the rule backwards. The rules are pretty confusing. And–they could change again! But make the assumption that you will be filing 1099s for stuff next year.

  117. Sara on Tue, 31st Jan 2012 5:30 am
  118. Hi Thank you for your help.
    I am confused I rented from my landlord and he had to give me (as the tenant) a 1500.00 deposit. He has sent me a 1099-MISC form back. What does this mean for me on my taxes???

  119. Jan Roberg on Tue, 31st Jan 2012 3:58 pm
  120. Hi Sara,
    I’m confused too. Usually the tenant gives the landlord a deposit, not the other way around. But I’m guessing that you moved out and that your landlord refunded your deposit. You shouldn’t get a 1099 for that. Your deposit refund is not an expense to your landlord and it is not income to you. Unless there’s more to this story–you should not get a 1099 misc from your landlord.
    You need to call him and figure out what’s going on. Bottom line–your rent deposit is not taxable income to you and there should be NO 1099!

  121. Suzie on Wed, 1st Feb 2012 2:50 am
  122. If a commercial lease is between 2 individuals & the rent check is being paid through a corporation, is a Form W9 necessary?

  123. Admin Roberg on Wed, 1st Feb 2012 3:55 pm
  124. Hey Suzie,
    I’m going to say yes. Err on the side of caution. You say the lease is between two individuals–so I say yes-W9. You also say it’s paid through a corporation–is the corporation writing the check? Then get a W9. Is a corporation receiving a check? Go ahead and get a W9 anyway. That way you’ve got it. You may not need to file a 1099 next year, but it’s much easier to get the W9 before you give someone money than it is to get the information on January 30th of next year when the documents are due the next day.

  125. Silvia Schagerer on Wed, 1st Feb 2012 7:52 pm
  126. I am a resident manager and my property manager is wanting to file a 1099 on me. Can she do this even tho my compensation is free rent. There are no invoices of payment becuase I dont recieve cash.

  127. Admin Roberg on Wed, 1st Feb 2012 7:59 pm
  128. The law requiring landlords to issue Forms 1099 MISC to service providers has been repealed. As long as the landlord is not engaged in any other kind of trade or business, then she doesn’t have to issue you a 1099.

  129. Mattia on Thu, 2nd Feb 2012 8:50 am
  130. Hi there. Last year I paid a graphic designer to do some logo work for me on a couple of projects that I was thinking of starting businesses for. None of them panned out, so I’m wondering if I still need to issue him a 1099 since the fees were over $600. I’m not deducting the payments on my taxes and did not set up any business entities. However, that could change in the future as I might still set up a company around one of the brands, but again, have not as of yet. Thanks!

  131. Tara on Thu, 2nd Feb 2012 3:46 pm
  132. Hi, I have a sticky with 1099s. My husband has a large animal veterinary practice that is operated as a PLLC. I am one of his employees. The clinic is located on the same property as our residence but since it is in an independent space we have not taken a home office deduction but instead we have charged the clinic rent. Do I need to file a 1099 for my husbands PLLC paying us rent? Also the farms we work for are driving me bazonkers calling for the EIN and think I’m mental when I explain that he is a corporation. Is there any hope that the IRS will publish a clear and up to date summary?

  133. Caroline on Thu, 2nd Feb 2012 4:43 pm
  134. Hi, I seem to be a little late for the party, but it would be great if you could answer my question. I actually just want to verify that I got it right. We are landlords (husband and I) and had a maintenance person for the house we rent out for the first time last year. We paid him a total of $750 for his services. I did the chat with turbo tax and also had someone there on the phone. The phone person said, I don’t have to issue a 1099-Misc bc the law was repealed in April 2011, the chat person said I do have to. If I understand right what you said in earlier post, the repeal did not cover landlords, correct? So I do have to issue a 1099-Misc. Sorry if this seems redundant and I appreciate your input!

  135. Jan Roberg on Thu, 2nd Feb 2012 5:10 pm
  136. Hi Tara,
    Yep, it’s crazy. And just do the W9s. I’ve got a corporate client who gets multiple 1099s every year. Everybody is just trying to cover their behinds.

    About the 1099 for your rent–no-do not issue a 1099 for the rent paid. You must report the income as the landlord, but you do not issue a 1099. Hope that helps.

  137. Jan Roberg on Thu, 2nd Feb 2012 5:59 pm
  138. Hey Caroline,
    It’s sort of is a party isn’t it? A party of confusion! And I see why you’re confused. And everybody else for that matter. But–the law about landlords issuing 1099s was repealed. Now, I’m going to copy this from my “The Tax Book”–”…no Form 1099MISC is required if the taxpayer is engaged in a rental real estate activity and isn’t otherwise considered to be engaged in a trade or business activity.”

    I’m going to copy this also from “The Tax Book” — The rules that require information return reporting for payments of $600 or more to non-employees (independent contractors) still applies.”

    So–the way I’m reading it is that–all the other %#*&$ stuff that you were supposed to have to do under the new law–you don’t. But you should really be doing a 1099 MISC to a contractor that did independent work for you. So I would issue your guy a 1099 MISC even though you’re a landlord.

    If I’m wrong–no harm no foul. Your guy is supposed to claim that income whether he gets a 1099 form or not. Plus, your behind is covered if you file it. Sorry I don’t have a better answer for you.

  139. Admin Roberg on Fri, 3rd Feb 2012 1:04 am
  140. Hey Mattia,
    That’s a really good question. Technically, yes you should. On the other hand, you do it to prove your contract labor deduction on your taxes–so why bother? On the other hand–you may wish to write off the expense later?

    The official, technical answer would be to issue 1099s, and then use those costs as “start up expenses” that you had in 2011.

  141. Valerie Henderson on Fri, 3rd Feb 2012 4:52 am
  142. Thanks for this great site. Let me just clarify one more time re: landlords. I owe 4 rental properties. I need to file a 1099 for all independent contractors who did work over $600 on those properties in 2011. Correct? Thank you!

  143. Admin Roberg on Sat, 4th Feb 2012 2:16 am
  144. Hi Valerie,
    I would issue 1099s for all independent contractors who did work for over $600 in 2011.

  145. Brandi on Sun, 5th Feb 2012 2:24 am
  146. I received a 1099 from google checkout who I use for my business. The amount on the 1099 is the amount that was processed but not actually my pay. How do I do my taxes with this?

  147. Admin Roberg on Sun, 5th Feb 2012 2:56 am
  148. Hey Brandi,
    I’m going to send you over to a different post about 1099k forms. I think that will handle your question: http://robergtaxsolutions.com/2012/01/1099k-%e2%80%93-what-to-do-with-it/

  149. Tara on Mon, 6th Feb 2012 2:43 pm
  150. Thank you! Now I only have to deal with one farmer who is insisting that he have my husbands SS even though I have given him a W9 with EIN.

  151. Patrick on Wed, 8th Feb 2012 3:13 am
  152. I rented out my NH house in September of 2011. I moved to my house in Florida. I have a property manager in NH that takes 9% of the rent for his charge. Every month he deposits the remainder in my account and sends me a profit/expense form. Do I need to send him a 1099-MISC form since I am essentially paying him (I believe it is over 600 for the year, plus some other charges like moving and storing my furniture). Or is it up to him to send me this form? What is the deadline for him to send it and what if I don’t end up getting one?

  153. Kailey on Wed, 8th Feb 2012 7:55 pm
  154. i am working for a company and we are recieveing 1099′s and i have no clue how or where to file them.. can you please help!

  155. Chris on Wed, 8th Feb 2012 9:22 pm
  156. Oh my! I offered to help my brother-in-law with his tax returns this year because he has to file Schedule E for the first time but I think I may be way out of league. He bought the family homestead after Mom died and decided to rent it out as a single family residence. Dad is holding the mortgage and receives monthly payments for the purchase of his home. Does my brother-in-law need to file a 1099 for the rent he gets from his tenants. Does Dad have to file a 1099 for the loan payments he gets from my brother-in-law? This is very confusing!

  157. Chris on Wed, 8th Feb 2012 9:25 pm
  158. PS, I entered my email incorrectly on my first comment. Sorry! It has been corrected here

  159. Admin Roberg on Thu, 9th Feb 2012 3:21 am
  160. Hi Patrick,
    I think I was talking to your property manager earlier this afternoon–same question from the other side. (Not really, I was talking to a Missouri guy.)
    Anyway, the way I’m calling it is: the property manager is giving you money. He’s the one that needs to back up the expense to the IRS.
    For example: Lets say he rents out your house for $100 a month. He keeps $9 for his fee and he sends you $91. Sometimes he might keep a little more to pay some expenses, but basically he’s paying you money.
    Now it’s kind of funky because technically you’re the one who’s paying the manager the $9, but the IRS is going to see all that rent money going into the manager’s bank account. So I would have the manager prepare a 1099 to you instead of the other way around.
    If you do not receive a 1099– you will still report the rental income that you did receive, even if you don’t receive a 1099. (Which is what you would have done anyway.)

  161. Admin Roberg on Thu, 9th Feb 2012 4:13 am
  162. Hi Kailey,
    This post will be the most helpful to you: http://robergtaxsolutions.com/2010/11/small-business-basics/

    Bottom line, you report a 1099MISC on a schedule C and you’re going to be responsible for self employment tax. (A schedule C is part of a 1040 tax form.) Read the post, I’ve got a lot of information there.

  163. Admin Roberg on Thu, 9th Feb 2012 4:23 am
  164. Hey Chris,
    Sounds like fun to me! (I really am a geek.)
    Your Dad needs to give your brother-in-law a 1098 mortgage interest statement. Here’s a link to the IRS website: http://www.irs.gov/pub/irs-pdf/f1098.pdf but you can’t just print it out, you need the special form. The IRS will give you forms for free.

    Your brother-in-law does not have to give a 1099 to his tenants.

    If you decide to bail on doing the return, send your brother-in-law to me. It might be helpful to have a professional get the first one started, then you can use it as a guideline when filing future returns. I handle all states and I’ve got a secure file upload to protect his personal information. (I gotta self promote sometimes.)

  165. James on Fri, 10th Feb 2012 2:05 am
  166. I have been a self employed sole proprietor in a small manufacturing business for 42 years. Over the past 20 years I also have acquired and personally manage 3 separate small commercial rental properties and filed my 1040 Sch E every year. I have never had a tenant request a W-9 or attempt to issue a 1099 to me for their rent payments….. until yesterday. So I’m scrambling to find out what the law is for tax year 2011 and of course wondering what had happened in past years and what the future holds. Please comment on whether my tenant is required to issue the 1099. My other 2 tenants have not said anything. I’ve learned to keep quiet and be extremely resistant to paperwork throughout my life. Thank you

  167. Admin Roberg on Sun, 12th Feb 2012 12:09 am
  168. Hi James,
    Welcome to the 1099 craziness. First, you never got a 1099 from a tenant before because tenants never had to give them. But with the changes in the 1099 rules,and then changing them back–well, everything is up for grabs.

    Personally, I don’t believe that your tenant has to give you a 1099 for your rent. But his accountant might believe it and that’s not going to change anything. Businesses are supposed to issue 1099s to any individual that they pay over $600 to. Since you own your commercial property as an individual–that’s where your tenant is coming from.

    He’s covering his behind. You’re going to report the income anyway so go ahead and give him the W9. (If you don’t use an EIN for your rentals–I’d get one. Don’t give out your social security number. http://robergtaxsolutions.com/2010/11/how-to-get-an-ein-number-for-your-business-for-free/

    I’d bet that next year all three of your tenants will be issuing you a 1099.

    One important thing: make sure that when you get the 1099, that your rent income is marked in box 1 and not box 7. Box one is for rental income, box 7 is for self employment income–you don’t want that for your rentals (I’ve seen lots of mistakes with that.)

  169. ROCKIE on Sun, 12th Feb 2012 4:49 pm
  170. I attempted to start a business in the state of CA in August 2011 but decided not to go forward with it. I had signed a lease with an individual that files taxes through her corporation. I paid her a total of $900.00. Do I give her a 1099 since I will be showing this as an expense? If so, it is past the deadline to send her one so what do I need to do? And, what is a W-9 that I have been seeing in many of your replies? I’m asking because my Father handles an Irrevocable trust which consists of 4 rental properties. I am renting one of these properties and want to know if I was also suppose to give him “the trust” a tax form? Once again, if so which tax form?

  171. Admin Roberg on Sun, 12th Feb 2012 9:15 pm
  172. Hi Rocky,
    First, a W9 is a Request for Taxpayer Indentification and Number and Certification. Here’s a link to the IRS website to look at one: http://www.irs.gov/pub/irs-pdf/fw9.pdf

    For this year, I would not worry about issuing a 1099 form to either the corporation or the trust. Next year, I’m thinking you probably will have to so have your father sign the W9 using the trust EIN number (but only if you have a business renting from the property. If you’re renting as an individual, no–you don’t have to.

    It’s basically a way for the IRS to make sure that everybody who receives income is reporting it. And Congress is fighting about it all the time so who knows what will actually happen. But right now, don’t worry for 2011 and plan on issuing forms for 2012.

  173. Debi Radcliffe on Mon, 13th Feb 2012 2:41 am
  174. I am a very small doll clothes and alterations business. Have sold at craft shows and on some internet auction sites for several years. For the tax year 2011, in addition to craft shows and internet sales, I rented space in a salon (thus “branching out” to a store-front of sorts). I just received a call from the salon owner that she did not receive my 1099 for rent paid for the year and she wanted to know what I was claiming. This was new to me as I had not started my tax prep forms yet. From what I’ve read so far, it appears that I do not have to provide a 1099 for 2011 to the receiver of my rental space but that she needs to claim the income. I am, however, planning to fill out a 1099 and give to her for my own benefit and records. Do I also need to do something with the W9?

    Thank you so much for offering this assistance.

  175. Scott Greene on Mon, 13th Feb 2012 6:54 am
  176. I have a hobby which is building a Model T Ford.
    I plan on selling the car in a few years and take its sale as a Capital Gain.
    So I am definitely NOT in the business of building cars, as I only work on it in my spare time.
    I paid a guy some money to do some specialized work on the engine.
    To me, the amount I paid the guy is part of the costs I am putting into the car and will be part of my basis when I sell it.
    So since I am NOT in a Trade of Business, do I have to report the payment to this guy on a 1099 misc?
    I read the 1099 misc rules and it said I had to be in a Trade of Business.
    What do you think?

  177. Kim on Mon, 13th Feb 2012 7:13 pm
  178. My husband and I own an auto detail business. He goes to the customer’s home and details their vehicle. Will his regular customers have to provide him with a 1099 for the service he is providing? We live in Illinois and over the course of a year some of his customers might spend 3-4K on his services.

  179. Kim on Mon, 13th Feb 2012 10:10 pm
  180. I also would like to know if a company is required to give a 1099. We have done over 12K business with a company and the company rep said they are not reporting what they have paid to us, they will not be sending a 1099, and that we should use our own records for our taxes. Does this seem legit to you?

  181. Admin Roberg on Tue, 14th Feb 2012 2:06 am
  182. Hey Debi,
    Sorry while I sit here and scratch my head for awhile. Mostly I hear complaints about people receiving 1099s who thought they shouldn’t get one.
    Okay, so you have a W9 from your landlord. You use that information to prepare a 1099 for her. Put your rent into box 1 for rents. Make sure you get the red forms to send to the IRS, but you give her a regular black copy.
    Keep the W9 with your paperwork for at leat 3 years. If you give her a 1099, be sure to file it with the IRS. Please be sure to send it to the IRS. I’m working on an audit right now for a guy with a 1099 that never got sent to the IRS and all of his income is now being examined. Don’t just “make one up” follow through with the filing. Thanks.

  183. Admin Roberg on Tue, 14th Feb 2012 2:26 am
  184. Hi Scott,
    I agree with you 100%. And I think you’ve got a really cool hobby!

  185. Admin Roberg on Tue, 14th Feb 2012 2:27 am
  186. Hi Scott,
    I agree with you 100 percent! I also think you’ve got a really cool hobby. Private persons do not issue 1099s for work done.

  187. Admin Roberg on Tue, 14th Feb 2012 3:07 am
  188. Hi Kim,
    right now, private citizens do not have to issue 1099s to businesses that do work for them. It would be different if he did the work for a small business, but private citizens, no.

  189. Admin Roberg on Tue, 14th Feb 2012 3:42 am
  190. @Kim,
    So a business paid your husband $12,000. That generally requires a 1099. Now you have to report the income anyway, but if they paid you by check or cash, they should issue you a 1099. If they paid you by credit card, then they are not required to issue a 1099. (Because the credit card companies issue 1099s, although they didn’t have to this year.)

    Bottom line, you report the income. If they get in trouble to not sending you the form–that’s their problem not yours.

  191. Kim on Wed, 15th Feb 2012 3:37 am
  192. thanks so much!! i do have one more question. in the above post (Deb’s) you said you were working with a guy who had a 1099 that never got sent to the IRS and all of his income is now being examined. do you mean they company didn’t follow through, or the person didn’t follow through? i spoke with the 2 companies that we did not receive 1099′s from and one is sending, the other made one for my husband today and he brought it home. if the company who gave us the 1099 today doesn’t file it with the irs, who will be in trouble here? i don’t want to give the irs any reason to look at us, that would be so nerve wracking!! now i am wondering if i should even submit it…maybe just go from my own records…the total on the 1099 does match my records. what do you think?? since they said they weren’t planning on reporting it, do i just trust that they will since they gave us a 1099? confusing!!!!

  193. Scott Greene on Wed, 15th Feb 2012 5:58 am
  194. This is a follow-up to Message no. 88 where I forgot to mention one thing about my hobby of building the Model T Ford.

    For liability purposes, I set up a Corporation to hold ownership to the car, and the costs for building the car will be added to basis to offset the capital gains when my corporation sells it in a few years..

    So my Corporate tax return has 0 income and 0 deductions, since it does absolutely no business and only owns the car.

    Does my Corporation that does no business and only holds ownership of the car have to issue a 1099 to the guy that was paid to do work on the engine?

  195. shawna on Wed, 15th Feb 2012 6:19 pm
  196. Hi,

    I had a commercial office that I sublet last year. I was just asked my information so my subleter could send me a 1099. Does she need to provide that to me, or the management company that I would send the rent checks to?

  197. Admin Roberg on Fri, 17th Feb 2012 2:50 am
  198. Hey Shawna,
    Technically, this year you do not need to give your landlord a 1099. But so many small businesses are so scared about not issuing 1099s–we’ve got 1099 mania.

    As I see it, you’re going to report the income anyway so why not let them issue you a 1099? It keeps your tenant’s accountant happy. Make sure the 1099 says RENT and not MISC INCOME.

    Do not give them your social security number. If they want a W9 from you, be sure to use an EIN number. If you don’t have one, you can get one from the IRS website: http://www.irs.gov/businesses/small/article/0,,id=97860,00.html

  199. Jan Roberg on Fri, 17th Feb 2012 3:49 am
  200. Hey Scott,
    sorry it took so long to get back to you. It’s a little busy in the tax office lately. (Some crazy thing about filing income taxes.)
    Anyway Scott, your corporation is not a hobby, your corporation is a business and does have to issue a 1099.

  201. Jan Roberg on Fri, 17th Feb 2012 3:55 am
  202. @Kim,
    Do report your 1099s. The example I gave Deb was something completely different. Real businesses reporting real income on real 1099s–you can document it all. It’s the right thing to do.
    There are some people who “make up” 1099s to show income that they haven’t earned to get money for an Earned Income Credit. It’s a whole different type of issue.

  203. shawna on Fri, 17th Feb 2012 8:14 pm
  204. hi gain,

    I wasn’t planning in reporting any of it, as it was never really ‘income’. I had to people who paid me rent for my office, and I would then submit one check to the property owner for the exact same amount. I was just sort of the middle man. I had a lease that I couldn’t break, so I had to find renters to use the space until the lease was up. do i still need to report that?

  205. Admin Roberg on Sun, 19th Feb 2012 2:23 pm
  206. Hey Shawna–
    You don’t realize it, but you’re one of the reasons that the government has gone all crazy with this 1099 reporting stuff. You just said that you weren’t going to report the income. But technically–you have to.
    Now I understand–you’re just a middle man–you’re not making any money. But in reality, you’re supposed to report that you did take money in and paid it out. Now–you’re not really cheating on your taxes, you don’t have any extra net income. But the IRS doesn’t know that. All they see is that you’re taking in checks and not reporting that income. It would be an ugly audit–but you don’t ever need to go there. Report the income on a schedule E–rental income. Money in, expenses out. CYA.

  207. valdez9 on Tue, 21st Feb 2012 3:03 am
  208. i was just informed today that i needed to give out 1099 to people who have worked for me .all though i am not a business i do have a tax number.for the last two years i have done small remodels ,custom, homes and also run a ranch of our own.the guys who work for me on the ranch also help on the homes ,i have always recieved 1099 ,but never issued a 1099.im sure there taxes are allready done and i need the labor deduction what do i do?

  209. Admin Roberg on Thu, 23rd Feb 2012 3:10 am
  210. Hey Valdez,
    This may come as a surprise to you but you do own a business. You remodel homes and you run a ranch–those are both businesses. Issue the 1099s, your guys should be claiming the money you paid them as income so it’s fine to issue the 1099s. The only ones who are going to be upset are the ones who were cheating on their taxes. (I know that sounds harsh, but it’s true isn’t it?)

  211. Zeena on Wed, 29th Feb 2012 6:13 am
  212. We have an Antique Shopt and purchase our inventory from a variety of places, mostly individuals, often at garage sales and sometimes they call and ask if we are buying.

    When I read about the repeal being related to Gold Buyers not being able to give a 1099 to each Gold seller, I thought that was similar to what we do.

    Are we required to give a 1099 to your Aunt Bertha when she sells the claw foot tub from the upstairs lavatory?

  213. Dave on Wed, 29th Feb 2012 7:30 pm
  214. I have a property that I leased to a trucking company in 2011 for 6 months. I had never rented the property before and did receive more than $600 from the trucking company, now i’m being asked to fill out a W-9 so they can issue me a 1099. Am I required to fill out this 1099?

  215. Tracey on Thu, 1st Mar 2012 12:49 am
  216. Thanks so much for all the helpful information. I’m an independent contractor and my company is an LLC. The new W9 baffles me. I used to check the box for “disregarded entity” but that no longer exists. I’m told I shouldn’t even check the LLC box. Does this make me an individual/sole proprietor now? I’m also told the IRS prefers an SS# for my situation, but I got and EIN to protect my identity and keep my personal finances separate from my business finanances. What should I do?

  217. Admin Roberg on Thu, 1st Mar 2012 2:03 am
  218. Hey Zeena,
    That’s an excellent question! I would say no. Aunt Bertha is a private citizen selling a item–she’s not doing work for you. So the 1099 would not be necessary.

    On the other hand, if you hired Aunt Bertha to refurbish your bathroom–and part of the work order is installing a claw foot tub–then she’s be performing labor and that would require a 1099.

    Can you see how the two situations are different? The 1099MISC is for labor performed. It’s not used when purchasing property–now that may change for next year–but right now, it’s not done.

  219. Admin Roberg on Thu, 1st Mar 2012 2:23 am
  220. Hi Dave,
    Technically the company needs to issue you a 1099 because they paid you over $600. The rules changed back and forth so many times that we’re all a little befuddled. Quite frankly–I don’t think they really need to issue a 1099 for rent–but so many accountants are demanding it I don’t consider it to be an unreasonable request.

    You do not issue a 1099, you only complete a W9 form. That gives them the information they need to issue you a 1099. You would have reported your rental income on your tax return anyway so it’s not like it’s harming you in any way. One thing though–don’t give them your social security number. Get an EIN number for your rental property (it’s free and it takes about 5 minutes.) Let them use the EIN number instead. Here’s more information: http://robergtaxsolutions.com/2010/11/how-to-get-an-ein-number-for-your-business-for-free/

  221. Admin Roberg on Fri, 2nd Mar 2012 2:45 am
  222. @Tracey–
    Keep doing what you’re doing. You are an LLC and you should never give out your social security number. You’re fine. :)

  223. Jim on Fri, 2nd Mar 2012 8:11 pm
  224. First of all I would like to thank you for your effort in keeping the misinformed up to date on the recent rulings regarding various rental property reporting requirement issues to the IRS . In reviewing all previous questions and answers I still seem to be uncertain as to what I should do. I am an owner and manager of a 4 unit apartment. I have made payments in 2011 to both private parties and general contractors for painters, gardners, plumbers, electricians,etc. Over the year, I have had individual expenses that amounted to over $600 and some that collectively added up to over $600. So under which circumstances do I issue 1099 MISC or any other document if any at all? Is the $600 threshold for small jobs such as gardening that run $60 a month but $720 for the year as well as individual jobs such as painting the interior of an apartment for $1000? And lastly, does this ruling apply to 2011 and beyond? And once again thank you. Your responses are greatly appreciated.

  225. paola on Sat, 3rd Mar 2012 3:04 am
  226. i need help. my boyfriend did some work for people whos house flooded, he was asked by the insurance company to fill out and affidavit with his info and the amount he charged so they could file a 1099. the insurance company sent a check on the homeowner and my bf name for more than what my bf charged. when asked insurance company said that was normal and that he should sign the check and he would get the correct amount from the homeowner and that he would only get a 1099 for the amount his affidavit showed this was in december. then in january they sent another check to the homeowner for an even bigger amount gain on both their names and again the insurance company said to sign it that thtas how the checks get cut with the homeoners name and the name of the last contractor and again that this wouldnt affect him.
    in january he received a 1099 for the amount of the check, since then him and the homeowner have been trying to get the insurance company to send him a revised 1099 and they keep saying they are working on it but they have also said he shouldnt have not signed the check even thou they have also aknowledged that they said it was ok for him to sign and that this wouldnt affect hos 1099. they claim the department that handles the issuance of the 1099 will not corrrect it. so this probably means he will get another 1099 for the other bigger check next year, and on this one he didnt even get a dime.
    both checks were deposited by the homeowner in their own bank account not my boyfriends account…… so what can he do now? pls help

  227. Suzi on Sat, 3rd Mar 2012 1:20 pm
  228. I am so confused. I am the bookkeeper for a small LLC company. We currently pay rent to a couple for the commercial building we do business out of. I took all my tax information to the accountant yesterday and he told me I should have sent my landlord a 1099. Actually he said I should have been sending them one every year (we have been there for 4 years). I had no idea that I was supposed to be sending them a 1099. I thought 1099s were for people who were service providers. What can I do now that it is past the February filing deadline? What about all the past years rent? Any suggestions you can give are much appreciated. Thanks!

  229. Admin Roberg on Sun, 4th Mar 2012 12:27 am
  230. Hi Jim–
    I’m going to tackle your last question first–does this apply to 2011 and beyond? I’m thinking yes–but Congress can come in any minute and change things so I don’t count on anything.
    That said–generally a 1099 is issued for making payments to a person that amount to over $600. So, if you pay your gardener $60 a month, then technically you would issue a 1099 for $720 for the year.
    Now–that said, if your gardener has a company like “Joe’s Gardening, Inc.” well then, for now anyway you wouldn’t have to issue a 1099. Or if you paid Joe by credit card.

    Now here’s the thing that kind of has me confused—if you look at the Schedule C–that’s the form that small business owners have to fill out–they’ve added a new line that says, “Did you make any payments in 2011 that would required you to file form 1099? http://www.irs.gov/pub/irs-pdf/f1040sc.pdf It’s on line i.

    Now, if you look at the Schedule E–that’s the form Landlords fill out–that line’s not there. Now I’m told that you should still complete the 1099s–but you don’t have the question on your form. Maybe it will be there next year, but I’m finding it interesting that it’s missing this year.

    Personally, I’d err on the side of doing 1099s. But if you’re having trouble getting the information you need to complete them — I’d use that as a good excuse for not getting them done–the form doesn’t say it’s required.

    I would definitely assume that the 1099 issue will with with us forever. Think in terms of politics. We currently have a deficit problem with the federal budget. The IRS estimates that there is millions of dollars of unpaid income tax due to people not reporting their self-employment income. They believe that the 1099 reporting will solve much of that problem. I think (opinion, not fact) I think that the 1099 reporting is how the government intends to increase tax revenues without actually raising the income tax rates.

  231. Admin Roberg on Sun, 4th Mar 2012 1:02 am
  232. Hey Paola,
    Please tell your boyfriend that he is not alone. I’m working on a similar case for a client in my office. What do you do with a 1099 for $100,000 when the client only made $80,000? Or whatever the numbers are.
    Here’s how I would do your boyfriend’s return:

    First–he really does have to list each 1099 form–the IRS looks for that in their computers. So all his 1099 income will go on line 1 (along with any other income.)

    Next, on line 2(I’m guessing that he’s a Schedule C kind of business) where it says “returns and allowances and any other adjustments” I’d put the money that went to the homeowner and not him. That way the rebates will be subtracted from his income.

    Make sure he documents all those rebates and everything, but I think it’s legit for him to deduct money that he has never received. At least that’s the way we’re doing it in my office.

  233. Admin Roberg on Sun, 4th Mar 2012 1:25 am
  234. Hi Suzi–
    Okay, technically your accountant is correct, but who even knew about that before this year? Nobody!
    So here’s the thing–I wouldn’t even bother worrying about prior years. Just let it go. For this year–okay, you should give your landlord a 1099–but you haven’t done it for 4 years. I would definitely do it for next year–give the couple a W9 form and explain that you’re going to have to report the income next year.
    Are they really just a couple who own a commercial building or do they have a corporation set up? If they have a corporation set up, then you don’t need to issue a 1099. You also don’t need a 1099 for credit card payments. (Just in case.)
    Yes, you’ve missed the 1099 deadline–I’m guessing that the old couple isn’t going to complain and turn you in. You still can electronically file 1099s with the IRS so you haven’t missed that deadline. I mean, if your accountant is adamant–well then do the 1099–he is technically correct. (If you read the 1099 instructions, yes you should issue a 1099.)
    But, for so many years, so many people haven’t even realized that this was even an issue–I’m not concerned with you being hurt in an audit over this.
    I know my answer sounds wishy washy–sorry about that. Your accountant is right–a 1099 should be issued, I’m just saying that if I were you I wouldn’t lose any sleep over this.

  235. Sonnie on Tue, 6th Mar 2012 6:26 am
  236. I am an antique dealer with a retail booth space in a antique mall. In 2011, I paid the mall owner over $600 for my space and plan to continue to be there thru 2012. This is my only retail outlet. There are 24 other dealers in this mall and we all pay various amounts according to the number of square feet of floor space in our booths. My CPA advised me that I need to send the mall owner a 1099Misc for the rent paid in 2011 and will need to send her one for 2012 before January 31st of next year. I contacted the mall owner and requested her business ID# so that I can send her the 1099s. She refused to give me any information and said she has not be told by her tax advisor that she needs to give this information to any of the mall dealers. How do I handle this.

  237. joe on Tue, 6th Mar 2012 9:38 pm
  238. i have a question that not even the IRS can help me with (at least by phone). i live in california. im a resident manager for a CONDO building that has 10 units. i live onsite and pay 250 (other 250 credited) rent for my managers apartment. i do not receive any wages from the association. i just clean, take care of the common areas and am around for appointments with contractors etc. the association issues me a 1099-misc with 3000 in the other income box 3. this is supposed to be them i guess reporting the rent credit. my agreement with them looks like a rental agreement and employee agreement. basically it says my rent is 500 but they will credit me 250 for my work. i think they also have workers comp insurance for me, im not sure. do i report this 3k on my 1040? i have been the last few years. ive never paid SE taxes on it.

  239. Admin Roberg on Thu, 8th Mar 2012 2:28 am
  240. Hi Sonnie,
    Here’s what I would do. (Me, Jan would do–not necesarrily the proper accounting advice.)
    I would scrap giving her a 1099 for this year. 1. It’s already late and 2. So many people don’t know about the rule, I’d just go with the flow and forget it. I’m pretty sure there will be “forgiveness.”
    But–for 2012, you really will need to issue a 1099. So here’s what you tell your landlord–you give her a W9 form to complete. Explain that because your accountant (and the IRS) requires that you submit 1099 forms for the rent you pay, she will have to complete the W9 form. AND–and this is the really important part–you won’t be able to pay her rent until she complies.
    That’s what the big companies are doing–you have the right to do the same.
    If you’re lucky, you’ll get her to sign the W9 in time to make your accountant happy.

  241. Admin Roberg on Thu, 8th Mar 2012 2:30 am
  242. @Sonnie–got the other message. Okay.

  243. Admin Roberg on Fri, 9th Mar 2012 1:32 am
  244. Hi Joe,
    I think everything is just fine there. Yes, you need to report the $3000 income, but I don’t think you’re self employed. I would agree that it should be counted as “other” income. You’re not in the business of managing the condo–it sounds more like you’re doing them a favor and they’re writing it out of their rent.
    And yes, they have to report it on a 1099. They are required by law to show your full $500 a month rent in income–so they show the deduction as a payment to you–but as other income, not self employment. I think everything is perfect. (I had a similar case and they were charging the fellow’s rent reduction as self employment income–really messed him up.)
    So you’re all good. Report te $3,000 on line 21 of your 1040–as other income.

  245. Amber diaz on Sat, 10th Mar 2012 1:51 am
  246. Hello, quick question, I am a nail technician, Independant contractor/sole proprietor. I pay a monthly booth rental to the owner of the salon, who also does hair. Do I need to issue a 1099 misc for rent I paid to her over $600 in a year.

  247. Admin Roberg on Sat, 10th Mar 2012 4:44 am
  248. Hi Amber,
    Technically, you should issue a 1099 to the owner of the salon for the full amount of the rent you paid to her. The figure should go in box 3 other income, not box 7, because you’re paying rent.
    Now–it’s awfully late in the season. Have you ever done a 1099 for rent before? You see the forms were supposed to go out on January 31. Do you have all the information you need to do the 1099?
    If it’s possible–I’d do the 1099. If you can’t I wouldn’t worry too much about it this year. You really will need to do it next year. So have the salon owner complete a W9 form for you. Get the information now, it’s so much easier now than later.

  249. Amber diaz on Sat, 10th Mar 2012 4:01 pm
  250. Hello, I started this business in september 2011, the owner is giving me a hard time, I filed the 1099 already online with her contact info and a blank ein because she would not provide out to me, even with a w9 request. I did however put it in box 1 for rent should I do a corrected 1099 online I think they dont send those for another couple of days also why does it not go in the rent box because shes not solely a landlord?

  251. Admin Roberg on Sat, 10th Mar 2012 4:42 pm
  252. Hi Amber–
    No box one for rent is exactly right. My bad. The salon owner isn’t only a landlord, but what she’s getting from you is rent so that’s correct. Question though–where did you file a 1099 online? And how did you do it without the ein number? I think other folks would like that information. (I use my professional software, I don’t know about the online thing.) Thanks.

  253. Amber diaz on Sat, 10th Mar 2012 5:18 pm
  254. Hello. The irs website had links for places that you can prepare 1099/w2 forms and then file online, the first site I went to wouldn’t let me do it without an ein but the second one (google efile for business) let me do it with a blank ein, you can then print from your.comp to give to recipient and they efile it to the irs and correct state agency all for 3.49, they also have options for it to be mailed to the recipient. Very easy and cheap, hope this helps, you’ve been very helpful to me

  255. Jan Roberg on Sat, 10th Mar 2012 6:22 pm
  256. Thanks Amber,
    You’ve helped me too!

  257. Ed on Wed, 14th Mar 2012 3:56 pm
  258. Hello. please I have a question that has been eating me up for days now. I am currently a sole member LLC and I am operating an online marketplace. So that means that I operate as the middle man (Just taking comission for every transaction). I charge using Paypal, but the only issue is that I require my users to deposit funds upfront before each transaction as a means of avoiding fraud. So I act of some sort of escrow and these funds are help on my Paypal account untill the trasaction is successful. With this 1099 IRS requirement, am I required to issue 1099 form to every user that earns $600 and above? If will it include members of other nationalities.

  259. Admin Roberg on Thu, 15th Mar 2012 2:59 am
  260. Hey Ed,
    I’m tired and I want to go to bed but I saw your post and decided that you needed an answer now. (Just wanted you to know that I think you’re important.)
    Rest easy. Because you’re using paypal–Paypal issues 1099s. Anyone you pay through paypal is covered. You’re off the hook. Good night. (And you can get a good night’s rest too.)

  261. Yolanda E. Rodriguez on Thu, 22nd Mar 2012 3:07 pm
  262. My firm manages Condominium Assocaitions. I have been asked my title companies to have the condominium association, which is a not-for-profit corporation fill out a W9. Is this correct? Should I be asking my associations to fill out W9′s?

  263. Yolanda E. Rodriguez on Thu, 22nd Mar 2012 3:24 pm
  264. Our firm manages Condominium Associations. When asked for Estoppel Letters from title companies, we are being asked that the Condominium Association, which is a not-for-profit organization fill out a W9? Is this correct? We are confused since the monies being collected are fees/debt to be paid by the members of the community.

  265. Admin Roberg on Fri, 23rd Mar 2012 1:58 am
  266. Hey Yolanda,
    Have them do the W9s. If your managment firm receives payments from the title companies, then you should complete a W9 for them. The title company needs to show the IRS who they make their payments to.
    It’s a legitimate request.

  267. Wayne on Fri, 23rd Mar 2012 5:02 pm
  268. Hey Jan,
    I own and operate a antique mall (LLC) in Alabama and need some advise please. I rent the building from my landlord for $1000.00 a month. I pay by company check. What forms need to be issued here if anything? My delaers/vendors are people that sell things in my store. I rent them a space to sell their goods. I do not take a % of their sells. Just a flat monthly rate for them. They pay by check or cash. All they do is keep their booth stocked and I conduct the sells for them and pass along that money to them at the first of each month. (They perform NO work for me.) What forms need to be issued in this case, if any? Thanks for your help in advance Jan.

  269. Admin Roberg on Mon, 26th Mar 2012 2:01 am
  270. Hey Wayne,
    What I would do have your landlord give you a W9 so that you can issue him a 1099 MISC for the rent you pay him in 2012. Since you’re paying him 12,000 a year–you should issue him a 1099.
    For your tenants, you should give them a W9 so that they can issue you 1099s. Their 1099s should say the rent they pay you, (which is box 1), they should not be “non-employee compensation” which is box 7.
    I know it seems like a pain in the behind, but that’s the way things are going and you’ll be protected by filing all the right paperwork.

  271. Wayne on Mon, 26th Mar 2012 1:10 pm
  272. Thank you sooo much for your help Jan! Great website and even better advise. Keep up the great work.

  273. David on Mon, 26th Mar 2012 6:53 pm
  274. Hi,

    My dad has owned an apartment building for the last 35 years, but it seems he’s done his taxes concerning it incorrectly for all of those years (depreciating assets using the wrong recovery periods, not taking Section 179 or Special Depreciation Allowance deductions, depreciating the labor for remodels instead of deducting it, etc.). Last year (2011) he remodeled an apartment before re-renting it out; from what I’ve gathered from TurboTax and your very helpful page here, here’s how I think he should report this:

    * He bought a refrigerator, a range, and some carpet. TurboTax used the 100% Special Depreciation Allowance to deduct all of the costs. It didn’t even give me a chance to select Section 179, but I assume the result is the same either way.

    * He hired a contractor to install the refrigerator and range, paint the interior, and repair odds and ends. He should get an EIN for himself, have the contractor fill in a W9, and then issue him a 1099 MISC (since the contractor charged him more than $600). Even though the deadline to issue the 1099 MISC was 1/31, he should still do this, correct? He should also notify the IRS by 3/31 that he issued the 1099 MISC.

    How does he deduct the contractor’s charges, by entering them on Schedule C, Line 11 (Contract Labor)? He’s never filled out a Schedule C before. I tried it out in TurboTax and found that Line 11 was essentially the only line filled out. Schedule C had other expense lines, but those expenses were entered on Schedule E. Is this correct?

    Hmm, actually, the contractor’s charges include the cost of kitchen cabinets, which he didn’t list separately. To be completely compliant, we’ll have to ask him to break out the cost of the cabinets and use the Special Depreciation Allowance on them, correct, even though the end result will be the same?

    Is there anything else that I should be doing on the return concerning the rental?

    Thanks a lot!

  275. Wayne on Mon, 26th Mar 2012 8:05 pm
  276. Hey Jan,
    One more detail. I also sell items that belong to me in my store. When I go to the bank to make a deposit I deposit the money from my sells and my dealers sells into one account. I then right them (the dealers) a company check at the first of the month from this account. Is this a problem? Would this require me to give my dealers a 1099?

  277. Admin Roberg on Tue, 27th Mar 2012 12:11 am
  278. Thanks Wayne. About the 1099 to the dealers–I would issue one. What happens is it looks like all the income is yours because you’re the one making the deposit. The 1099 will cover your behind in the event of an audit. It’s good business practice.

  279. Admin Roberg on Tue, 27th Mar 2012 12:23 am
  280. Hi David,
    You’re pretty good. The only thing I’d change is that you don’t need a schedule C–put the contract labor on the Schedule E, that’s where it belongs. (I think you don’t have a line item for that so stick it under repairs and maintenance.)
    The difference between the 100% depreciation and the section 179 deduction is that the 179 deduction may be limited depending upon income, the 100% bonus depreciation will not be limited. For most people, it turns out the same.
    And yes, to be completely compliant–you should break out the cost of the cabinets, but yes, the result will be the same.
    Good job! I hope your Dad appreciates your help.

  281. David on Tue, 27th Mar 2012 5:54 am
  282. Hi Jan,

    Thanks for your answer. I’ve been reading further on other websites and am a bit confused. Since the kitchen was remodeled, isn’t it an improvement, not a repair, and consequently it should be straight-line depreciated over 27.5 years? If so, which parts of the remodel need to be depreciated this way? Just the labor? It seems the range, refrigerator, and carpet can still be deducted; I’m not sure if the cabinets are deducted or depreciated. Please clarify! Also, if I depreciate over 27.5 years, do I still need to give the contractor a 1099 MISC?

    A related question: Over the years my dad has added fences, a courtyard window, and siding to the property. He depreciated them and “chose” a recovery period of 10 years for each of them. It seems that they are all improvements and should have been depreciated over 27.5 years, correct? The siding and fences are halfway through their 10 year periods. Should I switch them over to 27.5 years or just keep going with the 10 years? The window was installed in 2010, but my dad forgot to take the first year’s depreciation; I suppose it will be easy to switch it to 27.5 years.

    Thanks again.

  283. Admin Roberg on Thu, 29th Mar 2012 1:21 am
  284. Hey David,
    You’re getting into a little more detail than I fell comfortable handling over the internet. Technically the improvements should be depreciated over 27.5 years–but the improvements to the land and fences–that’s 15.
    Then there’s the issue of how to fix it–do you make an election to change the accounting method or do you go back and amend all those prior years?

    Bottom line though–anything that can possibly qualify as an expense–you want to expense. So anything that’s a repair should be expensed. But a lot of the items that you mention do sound like they’re genuine improvements–so you’re going back to depreciating.

    Also, make sure you break things out–like the the refrigerator because you can depreciate that faster.

    I hate to tell you to go back and amend all those returns–but I’m thinking that that’s technically the correct answer. That said, if you were to ask the accountant down the hall from me–you’d probably get a different answer–so you might want to check to see if you get an answer you like better than mine. I feel like I’m giving you a correct answer–but this is one of those cases where there are more than one right answer and mine might not be the easiest option.

  285. Jacob on Fri, 30th Mar 2012 4:38 pm
  286. Hi Jan,

    First I like to say that this is a great site and thank you for taking the time to give the advice that you do. I have two questions that I am seeking an opinion. My situation is that I have already filed my federal return for 2011. I have several rental properties and fill out Schedule E. I realized, after filing, that I did not correctly answer the two new Schedule E questions about 1099 issuance. Specifically I stated that I did need to issue 1099s but that I had not done so, i.e. ‘yes’ to the first question and ‘no’ to the second. In all actuality, based on the 1099misc guidance, am not required to submit any 1099s for last year. I would not like to get into the depth of my stupidity that caused me to make this mistake, but it occurred none the less and I did not catch it until after the return was gone. My first question is should I file an amended return and correct this mistake? I know that amended returns are usually used for correcting information that has an impact on filing status, income, deductions, missing information, etc.. To my knowledge, the answer to these questions on Schedule E has no impact on the reporting or deductions on Schedule E. So again, can and should an amended return be used in my situation? My second question is regarding potential IRS reaction to the way I answered the questions. I know these questions are new to Schedule E this year but have been on Schedule C. If I do not amend the return and let it state that I should have filed 1099s but did not, based on the history of this question being asked on Schedule C, does this put me at higher risk of follow up from the IRS? Thank you in advance for any opinion or advice you can give in this situation.

  287. Karen on Fri, 30th Mar 2012 11:43 pm
  288. Hi,
    You have a great site with excellent and quick replies which is impossible to find.
    My Question: I am self-employed. I had inventory from a prior business. I sold most of the inventory in 2011. I had originally borrowed money for cash flow from several business friends the year prior. (A different Business) The inventory value and My combined investment was 10 times what I was able to sell it for this last year. Anyway it was sold, I paid them back the money I borrowed, had a small amount that I kept, and am still paying rent for the storage space for the balance of inventory not yet sold. I see all this 1099 changes and everything going on. 1) for my 2011 taxes I didn’t have one for the landlord, is this OK this year? 2) The Loans paid back are not anything to do with Money out right? It was cash flow loaned to me with the old inventory, and when sold I just paid it back. 3) An I just saw that the sales commission was through me, thought the buyer had handled based on earlier agreement. So I need to file the 1099-Misc for that now and late. Will that be a problem for me?
    I’ve got a thousand other questions, I guess I need a service.
    Thank you for any help, Best regards.

  289. Admin Roberg on Sun, 1st Apr 2012 12:26 am
  290. Hey Jacob–
    Rule number one here–you don’t get to call yourself stupid! Especially on this page–the whole 1099 thing is a mess this year.
    Now the question about do you need to file 1099s and did you? So yes, you need to file 1099s and no–you’re not going to–yes, I’d amend. That’s a gotcha question if ever I’ve seen one. It’s like saying, “Gee, I’m supposed to do something but I’m not going to.” So that is kind of a set up for the IRS to come back at you.
    Here’s what you do, file the amended return. In the explanation box say, “question 1 on Schedule E was answered incorrectly on original return. Revised schedule E attached. No change in final tax determination.”

    Your amended return will have all the same numbers as the original, but your behind will be covered and you’ll sleep well at night. Do you have to? I don’t know for sure. But it’s the better safe than sorry thing.

  291. Admin Roberg on Sun, 1st Apr 2012 12:44 am
  292. Hi Karen,
    Thanks for the comment about the quick responses. (I haven’t been to the web site in over three days–sorry, it’s my busy season.)
    Okay–I would forget the 1099 to the landlord. (Accountant down the hall from the other company says 1099 the landlord–two opinions for the price of one.) I would definitely 1099 the landlord next year. If your landlord is a rental agent or corporation–no 1099 required at all.
    You do not issue 1099s for loan repayments. You’re right about that.
    Now for the commission–I’d issue a 1099–yes it’s late, yes there’s probably a fine–but I think it’s better to issue than not. (Besides you can probably get the late penalty abated since it will be a first time.)

  293. Karen on Mon, 2nd Apr 2012 10:22 pm
  294. Thank you for your help. Great advice, I don’t feel panicked now for what to do.
    Thank you again.

  295. Ben on Tue, 17th Apr 2012 4:13 pm
  296. Hi,
    I found your website and am so glad. There is a question I have about 1099-misc income for 2011. Currently I work for a property management firm and am treated as an independent contractor. Therefore, I am responsible for all my taxes, insurance, etc. and I have worked on some property owned by the owner of this management company.
    The owner told me he had to fill out a 1099-msic income form for the IRS for the year 2011 based on the income made from working on his properties. In the past he has never given me a 1099-misc form for work done on his properties. However, I have been receiving a 1099-misc form for years from the actual management company. My title in the management company is leasing agent, but I rarely ever work more than 30 hours a week. Therefore, I have free time to work on some of the owners properties for extra income.
    I am requesting an extension on my taxes for the year 2011 in an effort to get a factual answer to my concern. The owner of the company has never issued me a 1099-misc income for work done on his properties. However, he has told me his CPA told him it’s now the law and he had to issue me one for 2011 ( for work done on the properties).
    Is this true if it is true, I will be pushed up to another tax bracket, and do not have the money to pay my 2011 taxes now.
    One more question I have also been making payments to the IRS for taxes owed from 2007 – 2010, and taxes owed for 2011 will be added in the payment plan.
    I have seen commercial after commercial on television about law firms whom can help a person lower past due taxes and start fresh. Is this possible…do these companies really exist and can they really help a person.
    It does no good to lie to you…I use all of the income made for ordinary living expenses. I did have a friend tell me I could start making quarterly payments to the IRS for taxes owed in the future. However, I pay the IRS almost $200 a month for past tax years and will be adding 2011 to the pile. It is as if I am in a hole and it continues getting deeper.
    What do you suggest I do…?
    Thanks in advance for your help,
    Ben

  297. Ben on Tue, 17th Apr 2012 4:58 pm
  298. Hi,
    It is me again and I have a few more questions as well as explanations. My stepfather owns the property management company, and he plans on leaving it to me in a will or selling and leaving me the proceeds. I have also considered opening my own online company, and have gotten all the tax sales licenses needed as well as company license (it will be a sole proprietor). However, my step dad tells me to have it titled a LLC, and if anything should happen to the company, it does not affect me personally.
    My step dad has no children, and my mom has passed away…he’s an only child. Therefore, he will be leaving me most of his estate when he passes away assuming he passes away prior to me. He promised my mom he would help me any way he could once she passed away, but I hate what he does for a living. It has been very, very good to him. Although I hate what he does…I have learned a lot about managing my own rental property.
    There is one more question he bought two houses and when purchasing the houses put my name on them as a co-owner. One of the houses there is no debt, and the second house I live in with a small mortgage of $145k. If I explain this to the IRS when asking for a payment in compromise and tell them, we have an agreement for him (my stepdad) to receive all the income from these properties. Until he passes away or I should pass away…will they still consider me for an offer of payment in compromise? My real income is only about $30k a year, and I pay all my own medical expenses ( medicine, doctor’s visits, health insurance premium etc.) + car payment + student loan payment + the payment mentioned in my previous email to the IRS for back taxes owed of almost $200 a month.
    I hope that this makes sense and I have written in a way you can understand my questions. Oh, I do need to let you know there is no income on the house with the small mortgage because it is my residence. However, my step dad makes the mortgage payments…we have owned both properties for over ten years. The first property was purchased in 1998 and he gets income from that one, and the one I live in was purchased in 2001.
    My step dad told me it might be easier if we put both houses in an LLC therefore, we will actually only own the LLC and not the houses. He has bought almost all of his rental properties in LLC’s + he suggested I move into one of his properties (his property meaning one I have no ownership interest). Would this work better for me if I were to apply for a payment in compromise?
    Thanks in advance for your help…
    Ben

  299. Matt Scothorn on Wed, 18th Apr 2012 1:27 pm
  300. If I provide an easement to a cable company to have access to a cable pole and/or a cable hub building, and they give me free services in exchange for it… Do I have to fill out a 1099 for those services if the FMV exceeds $600? They are threatening to turn off my services if I don’t provide them with my tax id.

  301. Admin Roberg on Wed, 18th Apr 2012 3:56 pm
  302. Hi Ben,
    You’ve got a really good question and you really need to sit down with someone for some serious “Ben only” type answers. I’ll give you a little overview, but you need some “in person” serious answers.

    1. Yep–the new 1099 reporting rules are tougher and people have to send 1099s. That said, in reality, you should have been reporting that income all along. That’s why they changed the law–people weren’t reporting their self employment income. So–you’re stuck with those 1099s.

    2. I’m not a big fan of those TV ads with the “pennies on the dollar” promises. (I’ve got a bunch of blog posts about them.) JK Harris has filed for bankruptcy and so has Tax Masters. There’s a JK Harris office down the hall from me and they’ve left the building. Their clients are coming to my office asking for their paperwork and I’m not related to that company at all. The building landlord cannot give the people their stuff back. They are –pardon the expression–screwed.

    Now–I think you need help–but I’d go with someone local. You will need an enrolled agent or a CPA–and ask questions–make sure it’s someone with debt experience. But I’m really leary of the 1 800 number folks. Even though those big two are gone, it seems like a bunch more sprang up over night. So just use caution.

    3. You’re probably going to have renegotiate your payment plan–very few people actually qualify for an offer in compromise (the pennies on the dollar thing.) But then you need to get your tax house in order and do the estimated payments and all that. You’ve gotten yourself into a vicious cycle and you’ve got to stop. (Lecture, lecture.) It’s not easy.

    4. Have somebody else look at your old tax returns. Even if you had a professional do the other ones, there may still be some tweaking that can be done. (Maybe not, but if you don’t check you won’t know.) I just worked on some that were worth $2000 a year. It doesn’t solve their whole tax problem by any means, but that’s $6000 of taxes they don’t have to pay.

    5. Think about what you’re spending when you hire a tax company. Generally, if you came to me–I’d probably tell you about $2000 to get you fixed up. That would cover me fixing your back returns, maybe filing an offer in compromise, but most likely negotiating a payment agreement. That’s a ball park number for you to work with. I know that one of those 800 numbers starts at $5000 and another at $8000. I recently met with one ofthe $8000 victims who–for all that money came out with a montly installment agreement (that he could have negotiated with the IRS himself) and it was for a higher amount than what the IRS minimum standards are! He could have just paid that $8000 down on his debt and been halfway done with the problem already.
    Okay, I’ve rambled on too long, but hopefully I’ve given you some decent information. Good luck. (By the way, if you’re looking for someone in St. Louis–I’m in the gold tower at Westport Plaza–just in case.):)

  303. Admin Roberg on Wed, 18th Apr 2012 4:06 pm
  304. Hey Ben, regarding part 2,
    That’s a whole lot of tax questions and this is how I make a living. If you want that much advice, you’re going to have to make an appointment. Sorry, but I’ve got a family to feed.

  305. Admin Roberg on Wed, 18th Apr 2012 4:52 pm
  306. Hi Matt,

    They want to provide you with a 1099 for the free service. They want you to fill out a W9 form (your tax information) so they can do that. I’m okay with that and I understand their side completely.

    I think it’s important that the 1099 income be listed as rental income (box 3) and not non-employee compensation–which would be taxed as self employment income. Other than that–technically it’s the right thing. It’s like they’re paying you for the use of the land.

    (So if they shut of your cable, does that mean you get to cut down the pole? (Don’t do that, I’m just being onery.)

  307. Ben on Thu, 19th Apr 2012 2:43 pm
  308. Hi,
    I do appreciate your answers to the questions listed in my first dissertation :-) . In the mean time, I will try to make an appointment with someone local here where I live. Do you work for people in other states or just in St. Louis? Realizing it is probably very hard to work satellite.
    Do you have any suggestions on someone I might be able to see in Richmond, VA?
    Thanks again for your help…I really do appreciate the fact you care enough about people to answer questions free.
    You are a real great lady :-)
    Ben

  309. Wayne on Sat, 21st Apr 2012 9:56 pm
  310. I am a sole proprietor (Schedule E), and own 5 rental properties.

    Am I now required to fill out, sign and give W-9s to all my tenants?!

    Are all my tenants now required to fill out, sign and give me 1099s?!

    And if so, what do you do when – as oftentimes happens – tenants skip out in the night? Good luck finding them, much less a W-9 or 1099!

    Thanks for your help.

  311. Admin Roberg on Wed, 25th Apr 2012 1:57 am
  312. Aw Ben,
    You’re too sweet. I do work with people out of state, but for you I really think you need a person who can do some face to face work. (Okay, I also just did a blog post about why you don’t want to hire someone out of state also so I don’t want to be two-faced either.)
    A really good place to look is the National Association of Enrolled Agents website. You can plug in your zip code and they’ll find you an enrolled agent close to you. Here’s the link: https://portal.naeacentral.org/webportal/buyersguide/professionalsearch.aspx

    Now I’m not one to turn away business!! So I’ll be happy to take you on as a client–but for your situation, I’d try finding local help first. There’s really nothing that can quite compare to being able to sit down with a person face to face and brain storm–”but what if we do this? Then, what about that?” I think you’d truly benefit from that kind of relationship. Good luck.

  313. Admin Roberg on Wed, 25th Apr 2012 2:21 am
  314. Hi Wayne,
    Good questions. As a former landlord myself–I know all about those tenants that skip out in the middle of the night. Good luck finding them is right!
    Anyway, here’s the deal on W9′s and 1099s etc.
    1. If you’re renting apartments to regular folks–don’t worry about 1099s and W9s. That’s not what the whole 1099 thing is about.
    2. If, on the other hand, you’re a commercial landlord and you’re renting space out to businesses (who also sometimes disappear in the middle of the night–been there, done that) that’s more difficult. Those are people who you will want to give a W9, and they will want to give you a 1099.

    My guess, is that a tenant who skips in the middle of the night isn’t too concerned with filing proper tax returns so I wouldn’t sweat them too much. You’re still required to report the income whether you receive a 1099 or not. (And whether you can find the tenant or not.)

    3. You will want to obtain W9s from independent contractors who may work on your properties–like the painter, lawn guy, or electriction. And you’ll issue 1099s to anyone that you pay over $600 to. You don’t have to issue a 1099 if you pay by credit card (because they will receive a 1099K from their credit card company–so you might want to start using your credit/debit card more for you building maintenance work.

  315. Wayne on Thu, 26th Apr 2012 4:22 pm
  316. You’re amazing! Thank you!

  317. Audrey on Sun, 6th May 2012 9:19 pm
  318. I’m so happy i found this site. I hope you can give me a definitive answer.

    My husband and I are in the process of renting new apartment to live in. A Form W-9 was included as part of the rental application package.

    Why would we have to provide this information to our landord? We are not self-employed. We do not own any businesses. We work for one company and pay rent to another. Is a W-9 really necessary?

    Any guidance will be greatly appreciated. Thanks!

  319. Admin Roberg on Mon, 7th May 2012 7:11 pm
  320. Hi Audrey,
    I see no reason for you to complete a W9 form for your landlord. If anyone were to do a W9–your landlord would give one to you if you were a business.

  321. Audrey on Tue, 8th May 2012 10:52 pm
  322. Thanks for the advice.

  323. Lenila on Fri, 15th Jun 2012 3:08 am
  324. HI,
    My hubby and I are conservators. of our 18 year old daughter, Tiana, who has a severe disability. We now use Tiana’s money to pay for a tutor/nanny to help her after school. Does Tiana have to issue a 1099 to her tutor/nanny?

    Thanks in advanced! your blog is soo helpful.

  325. Admin Roberg on Fri, 15th Jun 2012 2:11 pm
  326. Hi Lenila,
    You’ve asked a really important question. And the definitive answer is, “Maybe.” Hate that answer don’t you? But there’s a couple of issues here.

    1. You said “tutor/nanny” — so, I’m thinking she’s spending more than an hour a week helping out. As a nanny, she might qualify as a household employee. In that case, read this: http://robergtaxsolutions.com/2011/11/nanny-tax-what-to-do-about-your-household-employees/
    Because that’s what you want to do with a household employee. If the nanny is making over $1000 a quarter, or over $1700 for the year, you should be filing a Schedule H and withholding social security and medicare taxes.

    2. The other option is to call her self employed and issue her a 1099 MISC. That could really mess up the nanny’s tax return so if you’re going the 1099 route–make sure she understands you’re doing that up front before you hire her.

    3. How do you know 1099 versus W2? Basically, if you’re the only family the nanny does this for, she should probably be a W2-household employee. If your nanny goes to your home for a few hours a week and then does the same thing for other homes–that’s usually a 1099 misc because she’s in the “business of being a nanny/tutor”.

    4. Now it’s perfectly acceptable to pay for the nanny with Tiana’s money. But I would think that the 1099 or W2 should be issued by you. Here’s why–Tiana, is your daughter, because she is disabled you are able to claim her as a dependent on your tax return for the rest of her life (as long as you are caring for her of course.) Not only do you claim the dependency exemption, but you may also claim the dependent care credit as well. And that’s the real reason for wanting to issue a W2 or 1099–to validate claiming the tax credit.

    Now you mention being “conservators” of Tiana’s money–so you may have some rules about how funds are distributed which would require that the 1099 or W2 be issued (like if the money is in a trust and the trust pays the nanny–then the W2 is issued by the trust) so that could muck up you claiming the dependent care deduction. I’m not sure what your situation is there.

    I probably gave you more answer than you wanted, but the whole nanny issue is really big. Remember, if you ever decide to run for public office–make sure your nanny tax is paid and it’s recorded properly. (The nanny tax downfall of many a female politician.)

  327. Tom on Fri, 24th Aug 2012 12:46 pm
  328. Hello,

    We own a wholesale textile business and have hired showrooms on a commission basis to represent our line nationwide. These showrooms bill and get paid by their clients directly, they keep their commission and send us the remaining balance. So, we don’t actually issue them any commission check. My question is: do we need to issue 1099s for the commission they keep even though the get paid directly by the customer and not by us?

    Thank you in advance.
    Tom

  329. Admin Roberg on Fri, 24th Aug 2012 2:48 pm
  330. Hi Tom,
    That’s an excellent question. I would think there are lots of people in a situation similar to yours. Here’s my opinion–you do not pay these people, they pay you, therefore they should be issuing you a 1099. I know it sounds backwards, but the showrooms are taking in the income and sending you a check–so for their record keeping purposes, they should show their payment to you.
    Now I realize that you are paying them for all intents and purposes, but for the paper trail–and that’s what the IRS would be looking at if there were an audit–the paper trail shows money going into the showroom and out to you. That’s why I say they should be issuing you the 1099.

  331. David Miller on Fri, 21st Sep 2012 4:32 pm
  332. Hi,

    I have been reading all of the Q&A in this thread and it was great. I have a condo that I rent out in TX. It is rented as a single family residential property. This week the tenant send me a W-9 and requested that I fill it out.

    From reading your answers I am under the impression that I am NOT legally obligated to fill our the W9 because this a residential rental NOT a commercial rental.

    The renter is an Estate if that matters but the lease specifically says this a residential rental and it forbids any business activity in the unit.

    I am reporting this income on sch E each year but I do not want to give the tenant my SS# and I do not really want to get an EIN for the one unit I have for rent.

    Am I correct in assuming that I am NOT required to fill out the W9 because the renter is residential??

    I appreciate your answer.

    Thank you
    D.Miller

  333. Admin Roberg on Fri, 21st Sep 2012 5:45 pm
  334. Hi D. Miller,
    You got me. I would say no, you shouldn’t have to do the W9. I can’t think of why an estate would need one from you. An estate is a tax return for a person who has died so you don’t have a dead person living in your apartment building do you? (Sorry I’m involved with a Zombie Halloween event with my chamber of commerce. There’s also a whole geeky line of argument on Zombies and estate taxes. I’ll try to stay serious.)
    I only prepare a couple of estate returns a year so maybe there’s something I don’t know, but I’ve never claimed apartment rent as an estate expense before. Usually I suggest giving out the W9–but I really can’t see a good reason why you should. And just in case you are dealing with Zombies–well you shouldn’t give a zombie your social security number. :)

  335. D.miller on Mon, 24th Sep 2012 4:56 pm
  336. Ha,ha,ha…Zombies!! I don’t think they are Zombies but you never know I guess!! Thank you for taking the time to answer my question. I also could not come up with a good reason to give them a W9. I called the IRS help line and spend literally 3 hours on hold, talking to different help lines, departments…etc.

    Finally after talking to 5 different people only 2 were able to give me an answer and it matches yours.

    The tenant can not write off residential rent so there is no requirement to issue a 1099-MISC. Therefore there is not requirement for me to fill out a W9.

    However, this answer only came after 2 other agents told me YES I should give them a W9. But they were overruled by 2 supervisors who I insisted on talking to.

    Have a great day, your help is greatly appreciated.

    David

  337. Admin Roberg on Mon, 24th Sep 2012 5:17 pm
  338. @David,
    Glad I could help. I’m guessing you’re not in St. Louis, but just in case, you’re invited to Join the Horde–it’s our Monster Mash Dash in Maryland Heights. Here’s the link: http://www.jointhehorde.com/
    But if you do have real zombies in your apartment building, you might want to leave them at home! :)

  339. Dell on Wed, 10th Oct 2012 8:09 pm
  340. Hi,
    I have a small farm and retired with SS as my sole income. I had a handshake lease for my farm land for 5 years with a big farm operation. They always sent a 1099 and I listed it as other income on Schedule F. Now they are huge, operating over 35,000 acres. They now want a signed 3-year lease and a W-9 for the $4,000 rent. Should I get a EIN? If I sign the W-9 do I have to continue filing a Schdule F? Can I instead list the $4,000 as “other income” on the 1040? I would like to discontinue filing Schedule F, just a 1040.

    Do I have to file a 1040 at all if my income is strictly from SS?

    Thanks.

  341. Admin Roberg on Thu, 11th Oct 2012 6:53 am
  342. Hi Dell,
    I won’t just get away with a plain 1040 and lising the rent as other income, but you won’t be filing a Schedule F either. What you need is called form 4835 for farm rental income. Here’s a link to see what it looks like: http://www.irs.gov/pub/irs-pdf/f4835.pdf

    Here’s the important thing: you don’t pay self employment tax on the farm rental income. If you’ve been doing a Schedule F, you’ve had self employment tax as a farmer. You’re not farming anymore, you’re a landlord so you don’t pay that tax.

    If you’ve been paying the self employment tax, you can go back and amend those returns for a refund. You can go back as far as 2009.

    About the EIN number. You don’t have to have one, it just keeps you from giving your social security number out. Since they’ve been issuing you 1099s already, they’ve already got your social security number so it’s not like you’re giving up anything.

  343. Mike on Thu, 11th Oct 2012 3:12 pm
  344. I am a contractor that will be staying out of state for a few months to complete a project for a client. My understanding is that since I will be away from home for less than a year, i can consider the rental payment for my temporary apartment as a tax deductible expense. Should i ask that the landlord fill out a W-9 and give them back a 1099 for this?

  345. Admin Roberg on Sat, 13th Oct 2012 6:49 pm
  346. Hi Mike,
    As I understand things, you will not be required to issue a 1099 to your landlord nor will you need to get a 1099 from them.

    And yes, your temporary aprtment is a tax deductible expense.

  347. Dell on Sun, 21st Oct 2012 8:45 am
  348. Hi,
    The way I read the instructions, Form 4835 is to be use for crop shares or shares of income and not for a flat rental charge. It seems to say a flat charge for land rental should be on 1040 Schdule E.

    ” If you were the landowner (or sub-lessor) and did not materially participate (for self-employment tax purposes) in the operation or management of the farm, use Form 4835 to report farm rental income based on crops or livestock produced by the tenant. See chapter 12 in Pub. 225, Farmer’s Tax Guide, for the definition of material participation for landlords.

    Do not use Form 4835 if you were a/an:
    • Landowner (or sub-lessor) and received cash rent for pasture or farmland based on a flat charge—instead report as income on Schedule E (Form 1040), Part I; ”

    Am I misinterpreting?

    Thanks, Dell

  349. Admin Roberg on Sun, 21st Oct 2012 4:06 pm
  350. Hi Dell,
    Nope you’re not misinterpreting, I was. I don’t have that many farm lease clients, but the ones I do prepare have crop shares. I wasn’t even thinking about straight leases. Sorry about that.
    A straight land lease goes on Schedule E–straight rental income.

  351. Kimberly on Tue, 27th Nov 2012 4:05 am
  352. Hi, I received a certified letter from the IRS for my 2010 tax adjustment causing me to owe about $1700 I spoke to IRS and they said a property management company that I rented from sent them a 1099 that said they paid me $6100 in interest. This is my correct. Most of the amount was the return of my deposit and a small fraction, maybe about $100 or less was interest paid. Did the property management company make a costly mistake?

    Thank,
    Kimberly

  353. Admin Roberg on Wed, 28th Nov 2012 9:51 pm
  354. Hi Kimberly,
    I sounds like your property management company did make an excessive mistake. Here’s what you do: Contact the company and ask them to correct the 1099B interest statement.

    If they don’t, I’d still fight it. You shouldn’t owe that money on a security deposit refund.

  355. Leah W on Mon, 10th Dec 2012 10:53 am
  356. You have provided excellent information. As many others are doing, I would love to get some clarification (based on your knowledge/understanding of the new laws), about which companies/service providers we need to have 1099′s for.

    We provide web development and internet marketing services as an LLC.

    - Do we need to provide a 1099 to our Lawyer for work he did in 2012 for our business?

    - What about services that we are provided as a business, and pay for, such as web hosting, business cell phone account with Tmobile, etc. They are all large companies (I don’t know if the web hosting is an LLC or a Corp). And if we do need to, how do we send them a 1099 (as far as, is there a standard dept for it? Accounting? Do we let them know we are sending it?)

    - What about home services that we planned to write off (or part of) such as home internet (Which we use for work since my husband and I both work from home and we are partners in the business), mortgage, etc?

    - For our independent contractors, we issued W-9′s, will that be sufficient? For people who are sole props that were paid as a business contracted for services, does it matter whether it is a W-9 or 1099?

    Thank you for you help and for providing so much information all ready!
    Leah

  357. Admin Roberg on Mon, 10th Dec 2012 11:15 am
  358. Hi Leah,
    Thanks for your questions. I just taught a class in this so I’m ready for you. Here we go:

    - Do we need to provide a 1099 to our Lawyer for work he did in 2012 for our business?
    Yes, you do. There are special rules about lawyers but the bottom line is that lawyers must get a 1099 just like any other contractor, even if your attorney is a corporation.

    - What about services that we are provided as a business, and pay for, such as web hosting, business cell phone account with Tmobile, etc. They are all large companies (I don’t know if the web hosting is an LLC or a Corp). And if we do need to, how do we send them a 1099 (as far as, is there a standard dept for it? Accounting? Do we let them know we are sending it?)

    Major companies, like ATT, Go Daddy, etc. are corporations and you do not need to issue them a 1099.

    - What about home services that we planned to write off (or part of) such as home internet (Which we use for work since my husband and I both work from home and we are partners in the business), mortgage, etc?

    Nope, you don’t issue 1099s for things that are considered to be personal. I’m in the same boat. I’m typing this from my home office, but I don’t issue a 1099 to my mortgage company, it’s still considered to be a personal expense.

    - For our independent contractors, we issued W-9′s, will that be sufficient? For people who are sole props that were paid as a business contracted for services, does it matter whether it is a W-9 or 1099?

    Ah–this is the important question. You issue a W9 to your independent contractors for them to fill out and return to you so that you have the information you need to prepare a 1099MISC. Any independent contractor that you paid over $600 to should receive a 1099MISC from you.

    If you’re going to be preparing 1099MISC forms, read this post I wrote about how to do it. http://robergtaxsolutions.com/2012/11/top-tips-to-prepare-1099-misc-forms-on-your-own/

  359. Debbie on Sun, 16th Dec 2012 10:22 am
  360. Hi,
    I own a small co-op shop consisting of vendor/dealers and consignments.
    We offer new, vintage, and antique items.
    I am required to re-apply for a used goods license with the town every year.
    They are a combination of hobbyist, artisans, crafters, etc….
    They pay me rent for the space.
    I do claim the rented space as income on my taxes.
    I cut checks for these folks every month for the goods/merchandise in which is sold in the store that they provide.
    I collect report and pay in the state sales tax that is taken in at the time of sale.
    I do require some monthly voluntary help in the store as well.
    I am concerned about the 1099 ruling along with the 1099k’s.
    The 1099k’s show the visa/debit activity which does not belong solely to the storeowner per say.
    The money is returned for the goods/merchandise sold every month by a check from the store to the vendor/dealer etc….

    Should I be issuing 1099s to each of these individuals along with consigners? Or am I okay because it is clearly for goods/merchandise and not labor? Should they be issuing me a 1099 for the rent space?

    Thanks

  361. Admin Roberg on Sun, 16th Dec 2012 3:22 pm
  362. Hi Debbie,
    I just taught a class on this–it’s pretty confusing isn’t it? You’re right about the 1099k–you’ll get that even though the 1099k is for other people’s charges. I would recommending issuing 1099MISC to everyone that you’re receiving charges for. At least if you’ve paid them over $600.
    The 1099MISC will cover your behind for the 1099k that gets reported to the IRS. You see, even though the tax form says the you don’t need to report the 1099k on your tax return–the IRS uses the 1099k for issuing their audit notices. So–if you receive a 1099k that says you made $100,000 — you sure as heck better somehow account for the $100,000, even if it means issuing 1099MISC to all the vendors at your craft booth.

    The vendors should also be issuing you a 1099 for the rent they pay you. (You can’t force them too, but technically, they should.)

    One more thing about the 1099k–let’s say a customer bought a glass bowl from you for $40 and charged it to his credit card. Then the next day he brought it back and you credited his card–your 1099k will show the $40 charge–it will not show that he got a credit for the return. Make sure you account for that in your taxes–you don’t want to pay more tax than you owe.

  363. Brian on Mon, 31st Dec 2012 10:46 pm
  364. What happens if you pay an individual contractor more than $600 for contract work and they refuse to give you a SS number or EIN number? Is there a way to make them provide one of the numbers or at least send something to the IRS to let them know you tried to issue the 1099?

  365. Admin Roberg on Thu, 3rd Jan 2013 8:05 pm
  366. Hi Brian,
    Good question. That’s why you need to have him sign the W9 before you actually pay him. But–Yeah, I know. Trust me. I understand.

    Technically, if someone won’t provide their EIN number–you’re supposed to withhold 28% of the payment for their withholding tax.

    Yeah, I know. You already paid. Been there, done that.

    Anyway, so now what do you do? You leave the TIN box blank. You still submit the form. You could possibly be subject to a penalty for filing an incomplete form, but you won’t be subject to a penalty if you can show reasonable cause–which I think you can.

  367. Julia on Wed, 16th Jan 2013 5:34 pm
  368. Hi,

    Do I have to send a 1099 to my insurance company? I have a small business (LLC) and my insurance company is an LLC. I am having some trouble deciding if I should sent 1099s to my landlord, insurance companies, etc. Does anyone know of a good list online of typical expenses one would have to 1099?

    Thanks in advance!!

  369. Admin Roberg on Wed, 16th Jan 2013 9:46 pm
  370. Hey Julia,
    The universal question, huh? Your insurance company is an LLC? Really? I can imagine an insurance agent as an LLC but I haven’t found an insurance company to be an LLC. I learn something new every day.

    But–your insurance is a product it’s not a service or labor, so I’d say no to the 1099. Same with the Landlord. Now if you hired me to do your taxes and if I charged you over $600, then you’d have to 1099 me because I’m considered labor.

    I spend well over $600 for my computer software–but that’s not “contract labor” it’s a product. Does that kind of clear things up a bit?

    When in doubt–pay with a credit card. (Or even your debit card.) Because the credit card companies have reporting requirements–it keeps you from having to issue a 1099–it’s a nice little “out” when you want to avoid issuing 1099s.

  371. Jo-Ann on Thu, 17th Jan 2013 7:28 am
  372. 1099 question… If you live in a co-op manufactured home park that is run by a board of directors elected by the co-op membership — and those elected to the board of directors receive a rent reduction during their term. If the rent reduction is $600/year, are the members of the board required to file a 1099?

  373. Admin Roberg on Thu, 17th Jan 2013 7:38 pm
  374. Hi Jo-Ann,
    I hate to say this but yes. I know, sounds crazy doesn’t it? But–being technically correct, the home park needs to record all of the rent that it receives–including the rent that is not paid by the board members. Here’s an example (because I’m sure that sounds weird). Let’s say the rent is $500 a month and the board members get a $50 deduction each month so they really only pay $450.
    On their tax return, the park puts down in income that it receives $500 for the rent, and they write off as an expense the $50.
    Now, being a normal person who can do the math, you’re probably wondering what’s the difference? But remember, you are normal–you don’t work for the IRS.
    And the reason it becomes an issue is if they are audited–one of the audit issues for landlords is “are they charging market rate for the rent?” That’s why you’re supposed claim the full amount of the rent that should be paid and write of the deduction as an expense.
    I hope I made sense, because it’s kind of a strange rule. But that’s the way it’s supposed to work.

  375. Julia on Tue, 22nd Jan 2013 6:14 pm
  376. Thank you SO much. That definitely clears things up!!

  377. Tanesha on Tue, 29th Jan 2013 9:51 am
  378. I have a small business question. I operate my small business out of my apartment, which I rent. There is a section of my apartment only used for my business. In order to use my rent as a deduction do I have to get a statement from my landlord or do I just need my lease with my rent on it?

  379. james on Tue, 29th Jan 2013 10:30 am
  380. I know that I may be asking you to repeat yourself and I apologize for that, but as a sole proprietor do I give my landlord a completed W9 or do they give me one? Do I still need to generate a1099 for my rent to them in 2012? What about previous years? Thanks!

  381. Jan Roberg on Tue, 29th Jan 2013 8:59 pm
  382. Tanesha,
    You don’t need a special statement–just the fact that you’ve paid your rent. You’re good.

  383. Jan Roberg on Tue, 29th Jan 2013 9:02 pm
  384. Hi James.
    You do not have to give your landlord a 1099.

  385. Masako on Wed, 30th Jan 2013 2:51 pm
  386. Hi Jan,

    Your website provides so much important information and I really appreciate your advice.

    My husband owns a LLC (A) which owns a commercial building. He also owns another LLC (B) which he does his main business. He is a sole member for both companies.

    LLC A is leasing the building to LLC B and LLC B filed 1099 to report the rent payment to LLC B. Was this correct although he is the owner of both companies and a sole member?

    He is reporting income from LLC B on Sch C (earned income subject to SE tax) and deducting rental payment to LLC A as an expense. He is reporting the rental income from LLC A on Sch E (not subject to SE tax).

    Though he owns both companies and Sch C income is subject to SE tax and Sch E income is not, is this a correct way of reporting his income? I looked up everywhere and came to a conclusion to follow a nature of income to report though it’s all coming from him, but could it be looked as if he is avoiding SE tax though that is not his intension?

    In 2012, LLC A paid to some individuals and contractors to repair and improve the building such as painting, paving, fixing roof and electrics. They are not corporations. Does LLC A need to file 1099 to report the payments to these individuals and companies though he is a sole member of the LLC?

    Thank you!

  387. jay on Thu, 31st Jan 2013 4:53 pm
  388. Hi Jan,
    I am a home owner rented a short term (8months) rental to a consultant. He is asking me to send him a w9 form. What does this entail? Do I even have to? I heard that law was repealed? well let me know. thanks
    Jay J

  389. Jan Roberg on Thu, 31st Jan 2013 9:03 pm
  390. Hi Masako,
    It sounds like it’s making sense. There’s a website that I think you should check out though: http://bradfordtaxinstitute.com/index1.aspx You’ll have to pay for the newsletter, but it sounds like your husband would like it. They have really good tax reducing ideas and they keep you legal.
    About issuing the 1099s to the contractors, yes, you should.

  391. Jan Roberg on Fri, 1st Feb 2013 9:50 pm
  392. Hi Jay,
    you don’t need to issue a W9 to a tenant in a residential rental. He should not issue you a 1099.

  393. Lisa on Sat, 2nd Feb 2013 8:58 am
  394. Good morning Jan. i hope all is well.

    I inherited a bit of a mess about a month back. I am working for a small family owned business and was given the task of 1099 this week. When I went into the system I realized that none of the information had been updated to reflect the new tax laws from last year. I realize these are probably repeat questions but here goes!

    1. Do I need to 1099 vendors that I have purchased merchandise form in the year 2012 for re-sale, and if so what is the amount of purchase required?

    2. We pay rent to a realty company every month, should we send them a 1099?

    3. We hire services through the community for various things. Is there a list of services that would be exempt over 600.00 or do we 1099 all of them to be safe?

    4. We pay insurance for our business to a large insurance company, should we 1099 them as well?

    Sorry, I know that you have probably answered all of these previously.

    Thank you in advance!! :)

  395. Jan Roberg on Sat, 2nd Feb 2013 2:10 pm
  396. Hi Lisa,
    I taught a class this fall on 1099s and even though I taught the class–it still confuses me. There’s always something. So here we go:

    1. Do I need to 1099 vendors that I have purchased merchandise form in the year 2012 for re-sale, and if so what is the amount of purchase required?

    You do not need to issue 1099 to vendors that you buy stuff from.

    2. We pay rent to a realty company every month, should we send them a 1099?

    No. If you paid rent to an individual–that would be different, but to a corporation, no. If you do issue a 1099, be sure to put the rent in box 1 and not box 7.

    3. We hire services through the community for various things. Is there a list of services that would be exempt over 600.00 or do we 1099 all of them to be safe?

    You basically 1099 all services–but here’s my little cheating trick–if you paid with a credit card or debit card–you don’t have to issue a 1099.

    4. We pay insurance for our business to a large insurance company, should we 1099 them as well?

    No. A large insurance company is going to be a corporation. Corporations don’t get 1099s. (For now.)

    Hope that helps.

  397. Cherise on Sun, 3rd Feb 2013 6:05 pm
  398. Lisa,

    I greatly appreciate all of the help and support you are provided people on this site. I am confused, just like everyone else and have spent HOURS trying to research what to do in my situation, but I feel like I am in the same place I was when I started.

    In 2012 I paid over $600 in rent to someone who rents a location from an agency. I pay to her, she then pays to the agency each month. I am not sure if this is sub-leasing or not, and I am not sure if it matters in this situation. I explained to her that I think I need to do a 1099-MISC for her, and need the W9 form, but she says that she has never heard of that and is unsure of the answer herself. She is the owner of a PLLC.

    I read all of the responses above and there were some answers that said individuals should fill out a 1099 and other’s do not need to.

    Could you please help me?

    Thank you for all of your help and patience. I greatly appreciate your assistance.

    Cherise

  399. Jan Roberg on Mon, 4th Feb 2013 9:31 pm
  400. Hi Cherise,
    Who’s Lisa?

    Do the 1099Misc. Here’s the IRS page: http://www.irs.gov/uac/Form-1099-MISC,-Miscellaneous-Income-

    When in doubt, do it.

  401. Kathy on Thu, 7th Feb 2013 9:47 am
  402. Jan, questions about property management companies and their commercial property owners. I get it that as a property management company we are now supposed to 1099-Misc to the property owner ( in the Rents box) for the rents collected on their behalf. My first question is, what do we include in rents to report to the property owner? Base rent; pro-rata portion of taxes, insurance, and common area expenses; late charges on rent; NSF fees; reimbursed suite utilities; reimbursed suite maintenance charges; all of these or only some of these?

    Second question, for accrual based properties, regardless of the rental category, we’d report the rental amounts tenants actually paid, rather than the rental amounts reflected on the financial reports?

    Thanks for any insight you can give,
    Kathy

  403. james on Thu, 7th Feb 2013 12:44 pm
  404. my land lord refused to let me sell my business,the buyers refs were good but the landlord was not happy.we had been trying to sell for over a year. we refused to pay anymore rent.he changed the locks after a month.he will not return our propert or our £2000 deposit.we have learned he has been renting out the property again with our equipment being used and charging a premium.

  405. Lynne on Fri, 8th Feb 2013 4:45 pm
  406. Very simple question, I worked for a friend, cleaning his office for two years. Actually me and another individual..I don’t have a business and he knew this from the beginning… He gives me a 1099. Is he permitted to do this with out advising me? And is there something he should of given me to fill out prior to hitting me with a 1099… Or can he just give me the 1099 without any warning?

  407. Jan Roberg on Sun, 10th Feb 2013 7:54 pm
  408. Hi Kathy,
    You put in rents the total rents that you received. Let’s say that you received $500 in rent. $300 was the actual rent, $100 in taxes and $100 for utilities. You’d still put $500 as the rent received. The owner will be writing off the utilities and taxes, you’re just verifying what was paid.

    And yes, you report what was actually paid even in the accrual properties.

  409. Jan Roberg on Sun, 10th Feb 2013 7:57 pm
  410. Hey James,
    you used pounds instead of dollars. I do American taxes. Sorry, but I’m not the best source for you.

  411. Jan Roberg on Sun, 10th Feb 2013 7:58 pm
  412. Gee Lynne,
    Why wouldn’t you want a 1099 for the work that you do? Aren’t you reporting that income anyway?
    If your employer is legitimate he should be issuing a 1099. He should have you prepare a W9 form to get your social security number.
    If he doesn’t give you a 1099 for the work he pays you for, he could get into trouble.

  413. Ryan on Tue, 19th Feb 2013 4:04 pm
  414. Hey there, great informative site! I hope I’m not asking a question you’ve already answered (I only read about the first half of the posts), but I can’t seem to find a clear-cut answer to my question. As a property manager, am I required to issue 1099′s to the individual owners of the properties I rent out on their behalf?

  415. Ryan on Tue, 19th Feb 2013 4:16 pm
  416. These are long-term rentals, if that makes a difference.

  417. Kathleen Roden on Thu, 21st Feb 2013 6:58 am
  418. My client’s (who is a athletic club) is a church. I cannot come up with any information of you have to issue a 1099 TO A CHURCH for rents? What do you think?

  419. Kathleen Roden on Thu, 21st Feb 2013 6:59 am
  420. Sorry Jan…let me ask with full sentences (lol). My client’s landlord is a church…Do we have to issue 1099 for rent to a church?

  421. Debra S on Tue, 26th Feb 2013 7:25 pm
  422. Jan,
    This has been an extremely helpful site! We have a small marine repair business and are incorporated. I have several 1099 related questions:
    1. We do a lot of service for the various government agencies (marine patrol, Dept. of Fish and Game etc.) but have never received a 1099, should we? We also do service work for a local boat rental business but haven’t received a 1099 from them either; should we? If we don’t receive them but we still declare the income, is there any penalty for us?
    2. Do I need to put the security deposit paid to our landlord on his 1099?
    3. We buy parts from several large vendors, all of whom are incorporated. Do I need to 1099 them for these parts/products?

    Thank you!!

    Debi S.

  423. Charlene on Sun, 3rd Mar 2013 11:21 am
  424. Hi Jan,

    I have a vacation rental property. I have two parties working for me.

    One party, an individual, handles booking and collects rents. This individual takes 10% of the rents collected. I receive 1099 from this individual for the amount I actually received. Is this right way for issuing or receiving 1099?

    Another party, a small business, manages the property. I pay them every quarter, which includes labour (cleaning, fixing, etc.), monthly management fee, and supplies they purchase for me. Should I issue 1099 to this small business?

    Thanks.

    Charlene

  425. Jan Roberg on Sun, 3rd Mar 2013 2:30 pm
  426. Hi Ryan,
    should a property manager issue 1099s to property owners? I say yes and here’s why. Let’s say you lease houses for Joe Blow. He owns 3 houses and they tenants all pay you $1000 a month for rent. You send the money to Joe and he pays you a fee for taking care of things. You are not earning $3000 a month on those houses are you. But if the IRS were to look at your bank account, they’d be asking about that money.
    By issuing a 1099–it shows that you sent that money to Joe and your backside is covered.
    So the question really is–who are the checks made out to? If they make the checks out to Joe himself–not your problem you only picked them up and delivered the checks. But if the checks are payable to you and you’re supposed to then pay Joe– issue a 1099.

  427. Jan Roberg on Sun, 3rd Mar 2013 2:39 pm
  428. Hi Kathleen,
    Let me make sure I understand. An athletic club rents space from a church. Does the athletic club need to issue a 1099 to the church for the rent?

    I don’t know. Sorry, I looked at the instructions and I looked in my handy dandy book–it doesn’t specifically mention churches. So, I’m going to go out on a limb and say, “Yes.” I could be wrong, but it’s erring on the side of caution.

  429. Jan Roberg on Sun, 3rd Mar 2013 2:57 pm
  430. Hi Debra,
    Lots of questions. Let’s roll.
    1. If the government isn’t giving your 1099s, makes you wonder doesn’t it? But the bottom line is, as long as you are reporting your income properly, it’s not your fault if they’re not.
    2. The security deposit isn’t a payment (per se) so it does not go on the 1099.
    3. You do not have to issue a 1099 when you purchase from a corporation.

    Bonus: you didn’t ask, but I’m adding this. If you buy something using a credit or debit card: you don’t have to issue a 1099 for that either.

  431. Jan Roberg on Sun, 10th Mar 2013 12:28 pm
  432. Hi Charlene,
    The person who keeps the 10% and issues you a 1099 for the rest–well I guess that is right. Then you just don’t claim the 10% that you pay her as an expense. And you only report the money she lists on the 1099 as your rental income.

    My only problem with that is it will look like your rents are a little low. This is just anal retentive accountant me here. I’m paranoid because I worked on an audit where the IRS said–Gee–why are your rents so low? But, technically, she’s issuing a 1099 for what she’s paid you so it’s good. Just keep some documentation about he keeping a 10% fee just in case it ever comes up. (It won’t, I’m just paranoid but keep it anyway.)

    You should issue a 1099 to the small business that manages the property. That’s the right thing to do.

  433. DIANA S on Sat, 30th Mar 2013 1:25 pm
  434. Great line of questions and answers! Now here is mine: I am retired and draw a monthly retirement benefit, with taxes withheld automatically. Additonally, I work a part-time job for a medical facility (10 hrs a week), and also have taxes withheld automatically. I have one rental house which brings in some income, and some deductions. Last year (2012), I ocassionally helped out a friend who is in the real estate business. I drove by properties and took an exterior photo of the places. She paid me a flat hourly rate. I provided my own equipment, transportation, etc. For the whole year, I did less than 70 hours of work for her (a little over $1000). I’m not her employee, and I don’t really feel like I am self-employed. This seems like a sporatic, temporary situation that brought in income that I am trying to report. On a form 1099 (which I never got) would this be a box 3 or a box 7 entry? And on my 1040 would this be a line 21 “other income”, or would it be reported on the self employment form? I want to do what is right, but this was hardly what would be considered my business or my main source of income, subject to self employment taxes. Right, or wrong? Thank you in advance for your help!

  435. Nancy V. on Wed, 3rd Apr 2013 4:08 pm
  436. I received a 1099-MISC from the Property Management company that takes care of my rental property. Am I responsible for submitting a 1099-MISC to them as well? Do I submit 1099-MISC along with schedule E and my 1040 tax form??

    Thank you
    Nancy

  437. Jan Roberg on Sat, 15th Jun 2013 10:15 pm
  438. Hi Diana S.
    As far as the IRS is concerned, you are self-employed. If you get a 1099, it would show the income in box 7. That’s okay, you’re going to write off your mileage, the cost of your equipment and any other expenses related to the job, but you will pay self employment tax and put the income on a Schedule C.
    If they give you a 1099 and put the money in box 3–then you can include it as hobby income on line 21 but you won’t be able to write off the expenses very easily. Here’s more information on hobbies: http://robergtaxsolutions.com/2010/10/business-or-hobby/

  439. Jan Roberg on Tue, 16th Jul 2013 7:58 pm
  440. Hi Nancy V,
    You received a 1099 from your property management company and you want to know if you need to send them one too. My gut reaction is NO, and here’s why:

    The property management company is collecting the tenant rent, that money goes into their bank account. They send you the income less their fees. For example, let’s say the rent is $1000 a month and their fee is 10%. They send you a check for $900. So, they should be sending you a 1099 saying they sent you $900. In that case, you don’t need to issue them a 1099.

    On the other hand, if they’re issuing you a 1099MISC that says $1000 — well that’s different, and you’re going to want to send them a 1099 showing that you paid them $100.

    Why all the 1099s? It’s all tied into the Obamacare. Increased income reporting is a side effect of the health care program. It also helps with the whole “audit trail” for the IRS. So, the property management company really does need to issue you the 1099.

    Also, you don’t have to issue the property management company a 1099 if they are a corporation. You would only do that if they were a small business or individual.

    When you file your tax return, you do not have to send the 1099 in with the return. It’s not like a W2–the W2 proves that you paid tax through your withholding. A 1099 usually has no withholding so it’s not necessary to mail it in.

    The IRS does get that information though, so make sure that you do report it on your tax return.

  441. Carol P on Thu, 5th Sep 2013 5:19 pm
  442. My friend has a small building he rents to a small business, should that business be asking for a w-9 ?

  443. Jan Roberg on Thu, 5th Sep 2013 9:08 pm
  444. Hi Carol,
    Technically, the small business should ask your friend to fill out a W9. If they do, I recommend that your friend get an EIN number and not give out his social security number.
    If they don’t ask him for a W9–that’s their problem, not your friends. But he shouldn’t be surprised if the come crying to him next April asking him for one.

  445. Trent on Fri, 6th Sep 2013 12:05 am
  446. I’m a general contractor and am wondering who i 1099 and who i don’t need to.

    1) a supplier that provides me with material or product. Ex. Cabinets? (No, Correct?)

    2} a painter that paints cabinets on the job? (i assume so)

    3) if i bring unpainted cabinets to a shop and pick up a painted cabinet, is the paint a product or service?

  447. Jan Roberg on Sun, 8th Sep 2013 8:17 pm
  448. Hi Trent,
    Makes your head spin doesn’t it? But I think you’ve got the gist of this.
    1. You buy product–no 1099.
    2. The painter that paints cabinets on the job? Yes, definitely.
    3. Aha, the trick question–the answer is it could be both, because you’re paying for the paint and the service of painting the cabinet. Issue a 1099 for the entire amount you pay–the contractor will then record the cost of the paint as an expense to his business. (You aren’t responsible for having to figure how much was for what.)

  449. Mina on Tue, 31st Dec 2013 5:02 am
  450. Hi, I have a question in regards to independent contractor .

    I worked with 3 different company as a independent contractor like below.
    A company : made around $600
    B company : made $0 but a lot of expenses
    C company : made around $2500

    when i file the taxes, is it possible to combine ABC together? because i would like to deduct B’s expenses from A and C’ income.

  451. Jan Roberg on Wed, 1st Jan 2014 1:03 pm
  452. Hi Mina,
    Thank you for asking such a great question! I see this all the time.

    First–you have 3 contract jobs–are they related? For example, what do you do? Let’s say you design websites. All of the jobs were for website design–then yup–definitely combine them.

    But what if the jobs are totally unrelated? Maybe one 1099 is for web design and another is for your other career as a professional race car driver. Sort of unrelated fields. In that case, I’d make two separate schedule Cs for two completely different businesses.

    But if you can possibly link the w2′s together, I like to see them on the same Schedule C because I agree with you, I like combining the expenses.

  453. PJ on Sun, 9th Feb 2014 11:28 am
  454. Hi Mina,

    I have several rentals…. I have used a few different guys to do lawn care and cleaning over the year. I have paid them cash, and the amounts have been well under 600 dollars for each of them. The question is… What info do I have to keep for IRS if I deduct the labor? No 1099′s were issued, since the amounts were small, but I want to make sure I don’t get in trouble for not having the right records.

  455. Jan Roberg on Sun, 9th Feb 2014 4:26 pm
  456. Hi PJ,
    Keep good records. Copies of cancelled checks, or signed receipts. Things like that. My lawn guy that I have now sends me a statement, but none of the lawn guys I ever used before ever did that. If you pay in cash, make sure you get receipts from the folks you paid. Otherwise, cancelled checks are great.

  457. Anonymous on Sun, 23rd Feb 2014 11:53 pm
  458. 3 accountants and 2 members of the IRS Have all confirmed to me that I must include sales tax in box 1 of my 1099-MISC to the landlord of my commercially leased office space since the tax is listed on my lease as part of my rent payment. My landlord has been extremely combatant with me claiming to my accountant that she is a CPA (which she is not) and demanding I remove the sales tax which I have been told not to do by 5 different professionals. They seem to think she may not have claimed my income which is why she is giving me such a hard time. She has now said that she will take whatever paperwork I give her and will be requesting the IRS audit me. She has also complained that I included the payment she automatically deducted on 12/31/13 for 1/2014 rent. I have been informed by these same 5 people that since I am on the cash method of accounting, I MUST report monies I spent in the year that I spent them, including this rent prepayment. My landlord is fighting me on this also arguing that I cannot deduct this until I have used it. To which I have been trying to explain to her that I am NOT deducting it as an expense until 2015 after I have used it, but I am REPORTING it as income she received from me. Can you please confirm who is right in this matter and if there is any recourse I can take from having her falsely accuse me to the IRS and creating an audit on my record if in fact she does request it and in the event that they DO actually audit me? Please let me know as soon as possible…I will be contacting a tax attorney tomorrow to give me more information. Thank you.

  459. Jan Roberg on Thu, 27th Feb 2014 5:33 am
  460. Dear Anonymous,
    It is my professional opinion that your landlord is a pain in the ass.

    Off course you are right. and you’ve got five experts (six if you count me) saying you’re in the right.

    Everybody gets 1099s–you include the sales tax, she writes it off. It’s as easy as that. If she’s not paying it, well that’s her problem, not yours.

    What’s she going to accuse you of? Filing correct paperwork? You’ve probably heard that old saying about people who live in glass houses shouldn’t throw stones. Well you landlord is what they’re talking about.

    I many comments and emails from people who have “reported” cases to the IRS that haven’t been followed up on. Here’s the thing–the IRS gets lots of those notices, but they will only even consider ones that have been filed properly first. And second, then there has to be some compelling reason for them to follow through and actually audit someone. So, I’m thinking the chances of you actually being audited because of her are slim to none.

    But, let’s say that I’m wrong. I’m thinking that your books are probably in good order anyway so I wouldn’t worry about that either.

    Never be afraid to do the right thing.

  461. Jean on Thu, 29th May 2014 11:10 pm
  462. Hi Jan,
    I am a landlord wit a couple of rental homes and had a situation come up. I found a great guy who is doing great work at a great price (tiling, woodwork…), but he did not want to fill out a W9 (has no SS# and no Tax id#). So he asked me if it is ok to have his girl friend fill out the W9 (in her name) and I write the check in her name ? (eventhough he would be doing the work). Is this OK ? I told him I will be sending a 1099 next year to his girlfriend. He is fine with it.
    Thanks

  463. Jan Roberg on Sat, 31st May 2014 7:12 am
  464. Hello Jean,

    I’m thinking you don’t realize what a difficult question you have just asked. Or, maybe you do which is why you posted it on a fairly anonymous web forum because you know what a sticky question it is.

    To be honest, I was going to delete you post and avoid it altogether. But I think there’s probably a lot of people who have your same question and just don’t have the guts to ask. I figure you deserve a real answer.

    It looks to me like your guy is an illegal alien–which I’m figuring you’ve already guessed. That’s why he has no social or ITIN. He wants you to issue the 1099 to his girlfriend.

    Option 1: walk away from the situation and hire someone else. As a former landlord, I understand how difficult it is to find someone who does great work at a great price that you trust. But you need to remember that this is an option.

    Option 2: When you have a contract laborer who refuses to give you his social or ITIN number, the IRS expects you to withhold 28% of the payment to the contractor as income tax withholding. You would have to file a form 945 in addition to your 1096 and 1099s. Here’s a link: http://www.irs.gov/pub/irs-pdf/f945.pdf. So, fr every $100 you would owe your guy, you’d only give him $72 and you’d put away $28 to give to the IRS.

    Option 3: you receive a W9 from the girl friend and issue the 1099 to her. This is more problematic–I’m not a lawyer, but it’s looking like tax fraud and you’d be a knowing participant. Now, maybe not. The girlfriend could set up an LLC and as an LLC you could hire her company and she could hire this guy to do the contract labor for you. And she could be responsible for withholding the 28%, etc. etc. I’m betting it ain’t going to happen this way, but–it’s possible. But that’s the only way you should consider issuing the 1099 to her. She sets up a business and you hire her company to do the work.

    Let’s go back and look at option 2 again for a minute. The reason you have to withhold the 28% income tax is because he will not give you an ITIN number. He says he doesn’t have one. Fine–but–he can get one. Even if he is an illegal alien, he can get an ITIN number when he files a tax return.

    I know this sounds crazy, but the IRS would rather have illegal aliens paying taxes than reporting them to NSA.

    Since he has no ITIN–that’s telling me he’s not filing his taxes–which is why the IRS is doing the 28% withholding rate for people who won’t give their ID numbers to their employers–for the folks who aren’t filing.

    Everybody else who is bidding on your contract labor has to pay their income taxes–so that could be why your guy is so inexpensive. Once you start withholdiing the 28%, his billing may increase.

    One more thing about option 3: Let’s say you ignore my advice and you go with option 3 and pay the girlfriend and 1099 her instead. Let’s say everything is fine, you don’t get caught, all is good etc. — then, one day he and the girlfriend break up. She goes off and gets married to some other guy and suddenly she realizes that she really doesn’t want a bunch of self employment income from her old boyfriend on her new husband’s income tax return. She files a report with the IRS–that’s not her money, she’s never worked for you, etc. Now you’re being audited and because she never has worked for you you lose all of the tax deductions from this work, etc.

    Now, I’ve just talked about tax stuff. There’s other issues too that are out of my league, but I’m going to give you a link to a legal site just to give you a clue: http://www.nolo.com/legal-encyclopedia/legal-pitfalls-hiring-undocumented-immigrants.html

    I’m not going to tell you what to do, I just hope I’ve given you enough information to make an informed decision.

  465. Jean on Tue, 3rd Jun 2014 8:19 am
  466. Hi Jan,
    Thank you so much for answering the question and giving so much information. Really did not figure out how difficult/complex of a question it was. For me it was a relatively OK or not OK answer. From your answers, there seems to be a lot of other issues that need to be considered.
    Just wanted to have confirmation : from my understanding in your answer, an illegal alien CAN get a TIN# ? Always thought that you needed to have a green card/resident alien/or visa to work in the US? why could a TIN # be issued in this case ?
    I am sure these answers will help many other people that have run in similar situations.
    By the way, your blog is exceptional. Great questions and so much detailed information..

  467. Margaret on Thu, 5th Jun 2014 8:50 am
  468. I am an expat whose lived offshore for 25 years. My mother died and I want to move some heirloom furniture for my children. I’m told I need an ein. Should I do this? Will it increase my profile?

  469. Dawn Williams on Wed, 11th Jun 2014 2:13 pm
  470. Apologize if this question has been answered already but am having difficulty with a W9 and 1099 issue. I am a property manager for commercial properties and have been asked to get a W9 from a tenant who has moved out so we can process and send their security deposit refund to them. I don’t believe the return of a security deposit, held in a separate account that was never recognized as income to the landlord would be something we would issue a 1099 for to the former tenant. Am I correct in pushing back as to why we need this from the tenant?

  471. Joan on Thu, 19th Jun 2014 8:17 pm
  472. Hi Jan,
    I own a property management company that receives rent and then passes it through to the owners of the property, less commission. I issue the property owners 1099s for the gross amounts that we pay to the owners. Do I have to show the rents my company receives as revenue on my tax return? It is basically a pass through transaction. Thanks so much for your help!

  473. Jan Roberg on Sun, 22nd Jun 2014 7:45 am
  474. Hi Joan,
    Thanks for posting this question. I actually get it all the time talking to people in my office but I don’t think I’ve actually written about it before.

    Here’s an example of the way it should work:

    “Abby” hires you to rent her house out and manage the property.

    You rent the house to “Betty” for $1000 a month.

    Betty pay $1,000 a month to Joan. Joan pays $920 a month to Abby ($1000 less an 8% commission.) Of course, you’ll withhold whatever you take out for your commission and whatever other expenses you withhold for but this is just an example.

    Joan will claim $12,000 in income for the rent — because Betty paid the money to Joan.

    But Joan will also show $11,040 paid to Abby because that’s what was paid to her. So Joan’s net will be $960 –the commissions that she actually earned.

    Why do you want to show the $12,000 when really you’re only making $960? It’s for the audit trail. If the IRS decided to audit you, they’d pull your bank statements. The first thing they’d see is $12,000 of revenue going in and you only reporting $960. Also, you’re issuing 1099s for $11,040–so if you only reported $960 of income–how could you afford to pay $11,040 in 1099 rental income?

    You see–it would raise a red flag that you don’t need. Even if at the end of the day, you had reported all of your “real” income–because of the other things, you’d look suspicious to the IRS–and you don’t want that.

    I hope that makes sense. Do report all the income–and make sure you show it going out as well.

  475. Jan Roberg on Sun, 6th Jul 2014 9:06 am
  476. Hi Dawn,
    I agree with you. You shouldn’t have to issue a 1099 for a refund of a security deposit. What box would you put the money in? It’s not rent. It’s not non-employee compensation. I suppose they could say “other” but that’s not income to the person you’re returning the money too.

  477. Jan Roberg on Sun, 6th Jul 2014 9:24 am
  478. Hi Margaret,
    I’m not understanding why you would need an EIN to move some furniture. Perhaps they mean that your mother’s estate needs an EIN? Also, as an expat, you should have a social security number which is a US identification number. I’m sorry, this is a bit confusing to me.

  479. Cynthia M on Sun, 20th Jul 2014 1:00 am
  480. How kind of you to share your insights. I have a house that I am renting out to tenants that have consistently late with rent. I have never charged them for the lateness but it is coming more frequently and for longer periods of time. I inquired about last month’s rent and my tenant replied that he has applied for assistance (no specifics) and that (they) he require me to fill out a W-9 form. Does this make sense? I should warn you that I live in CA……

  481. vinh on Thu, 24th Jul 2014 11:09 am
  482. hi! i have a nails salon businesses want to sell it 32 thousand then ppl to buy it then they give me money deposit 2000$ but it over then week they don’t want to buy the shop anymore so i have to give them all the money deposit ? the nails salon in buffalo New York ……thank you so much !!! they have a recipe 2000$ but don’t write anything about give back if don’t buy the shop…

  483. Jan Roberg on Sun, 10th Aug 2014 3:56 pm
  484. Hi Cynthia,
    I’m guessing that the agency that will be providing assistance to your tenants needs the W9.

    I’m okay with that. What I don’t want you to do is give those deadbeats your social security number. Apply for an EIN number to protect yourself (it’s free, and easy) and give them that, not your social security number.

    I would also (since I’m a suspicious nag) request that you give the W9 directly to the agency requesting the W9. That puts you in contact with the folks who will actually pay the rent. Also. if your tenants are being deadbeats who are yanking your chain–well you’ll know a little sooner now won’t you?

  485. Jan Roberg on Sun, 10th Aug 2014 3:58 pm
  486. Hi Vinh,
    I’m sorry but I’m not a lawyer and that sounds like a legal issue. In some states, you don’t give back the deposit, but in some places I’m pretty sure you do. You’d better get an attorney to help you out. Sorry.

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