1099 Rules for Landlords and Small Businesses

383 thoughts on “1099 Rules for Landlords and Small Businesses”

1. 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.

2. 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

3. 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.

4. 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!! 🙂

5. Hi Jay,
   you don’t need to issue a W9 to a tenant in a residential rental. He should not issue you a 1099.

6. 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.

7. 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

8. 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!

9. Hi James.
   You do not have to give your landlord a 1099.

10. Tanesha,
    You don’t need a special statement–just the fact that you’ve paid your rent. You’re good.

11. 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!

12. 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?

13. Thank you SO much. That definitely clears things up!!

14. 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.

15. 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?

16. 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.

17. 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!!

18. 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.

19. 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?

20. 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.

21. 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

22. 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/

23. 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

24. 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.

25. 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

26. 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.

27. 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

28. 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.

29. 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?

30. 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.

31. 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.

32. @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! 🙂

33. 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

34. 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. 🙂

35. 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

36. 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.

37. 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

38. 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.)

39. 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.

40. Thanks for the advice.

41. 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.

42. 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!

43. You’re amazing! Thank you!

44. 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.

45. 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.

46. 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.

47. 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

48. 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.)

49. 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.

50. 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.):)

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