Are you confused about the rules for small businesses and landlords issuing 1099’s for anyone that they’ve paid over $600 to? Has a company asked you to fill out a W9 form because you or your business is doing some kind of work for them? It seems like everybody is a bit confused, even the IRS. But here’s help.
UPDATED JANUARY 2016
The rules have changed several times since the original post. If you’re preparing 1099s or tax returns for tax year 2016–these are the updated rules.
The 1099 law is actually part of the Affordable Care Act although it has nothing to do with health care. Is your head spinning yet? Seriously, the 1099 law states that businesses will be required to issue 1099 forms to contractors that they have paid over $600 to.
So who gets a 1099 MISC? Basically, if you own a business, or are a landlord, you need to issue a 1099-MISC to anyone that you’ve paid over $600 to for labor. So, let’s say you pay a computer programmer to set up your office system – you’d issue a 1099 MISC. But if you buy a computer for $1000 – then you don’t. Confused yet?
Okay, here’s another situation – you issue a 1099 MISC to individuals and LLCs, but not to corporations. So, let’s say Roberg Tax Solutions prepares your business tax return for $800. Roberg Tax Solutions is an LLC, so you think okay, I’ve got to issue a 1099 – BUT, Roberg Tax Solutions has elected to be taxed as an S Corporation. Say what? Now you don’t have to issue me a 1099. How do you keep track of that? By looking at the W9. Make sure all contractors you work with complete a W9 form. It will tell you if they are a corporation or not.
If you need to prepare 1099s, here’s a link that will give you information on how to do it: How to Prepare a 1099
If you’re a landlord or small business owner you should expect that you will need to file 1099 forms for your contract laborers this year. Start collecting information from them now so that you’ll be prepared come January. You’ll need a W9 form, here’s a link: W9
Print it out and have all of your vendors sign one. You can be hard-nosed about this too. No W9, no payment. It’s that easy.
If a business that you provide a product or service to asks you to complete a W9 form, it is a legitimate request. If you’re a sole proprietor and don’t have an EIN number, you may want to apply for one so that you’re not giving out your social security number all over the place. If you’d like more information on EIN numbers, read my other post: Free EIN
You can get an EIN number directly from the IRS for free.
One question that I’m always asked is, “Is there any way to get out of having to issue a 1099?” The answer is, “Yes.” If you pay a vendor with a credit or debit card, you do not have to issue a 1099. The reason is, when you use a credit card to pay a vendor, the credit card company will be issuing a 1099K statement showing the payment you made. So, it you want to reduce the 1099s you have to issue, use your credit card more often.
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Hi Barry,
I actually get this question quite often. Weird, right? But the answer is – it depends. (I know, I always say that.) Let me explain, because I’ve had this question a lot. You tenant is an LLC – I’m pushing on this a little. Are you renting commercial space to a business? Is that the situation? For example: I have an LLC, I own a tax company. So if you were my landlord and you reimbursed me for work I did in my office space, well then yes, you wrote me a check and paid me for my services – even though painting or repairing a wall isn’t my normal business. That would make sense.
But – and this is why I said it depends. If I’m renting a house from you, and I make repairs on that house, just because I happen to own an LLC doesn’t mean you need to issue me a 1099. That’s my personal residence. Yeah, sure, I’ve got a home office and I write some of my home office expenses as a business deduction, but the main use for my home is for me to live in in my residential neighborhood.
See the difference? I’ve had some landlord’s and tenants have some big fights over that.
Here’s another thing, if you do have a situation where you’re the landlord of a commercial space, and you have a real business client, then they should be issuing you a 1099 for the rent they pay to you. So – you should have all the information you need on the 1099 they give you. Right? Just trying to make it easier for you, if necessary.
I hope that helps.
If I am the landlord and I reimburse a tenant for work that they had completed in their unit, the tenant is a LLC, if the work is >$600 then do they have to provide me a W9 so I can 1099 them? thank you
Hi Gina,
The thing about being an “independent contractor” is that you make your own rules. You can choose not to work for that person. I know that sounds flip, but sometimes you gotta fire a client. That’s what he is, he’s not your boss, he’s your client. If you just don’t have the nerve to tell him his fired, then raise your prices. (I suggest triple what you get now.) Either he’ll end the engagement, you at least you’ll be making enough to make the headache worth your while.
A couple of thoughts here – you’re an independent contractor – why don’t you have a pen with you? What are your printing on his copier? Shouldn’t you do your own printing? Bring your tools with you!
Maybe he had a bad experience with another contractor who never did what he said he would.
I’m not trying to defend this guy, I’m not there, just looking at your post from an outsider’s point of view. You didn’t ask a tax question so I went into Mom mode.
I am a 1099 for a pharmacy LLC company and the owner wants me to get detailed time sheets and wants everyone I go to talk about the business to sign off to prove that I was really there. He tells me when to come in daily and he wants to know every second what I am doing and where I am going. He hired me as a Marketing Coordinator and everything I submit, he redoes it, often not following journalism/advertising guidelines. When I am in the office, I do not have access to pen, pencils, paper, all the doors are locked so it is hard to get copies printed out on the copier; if I work at home, where I have the tools to do my job, he gets upset, but if I don’t work from home before I come to the office, I am not prepared for the day and he gets upset if I can tell him exactly when and where I am going. I am ready to seek counsel on his micro-management and disrespect and he does not treat the one employee, a pharmacist, that way. I feel he is violating the terms of me being an independent contractor.
Hi Michael,
Good question! I happen to be on the board of my Home Owners’ Association and in my state, a Home Owners’ Association is a corporation. You don’t need to issue a 1099 to a corporation. I’m guessing that holds for all states, but you might want to double check where you live. There’s actually a special tax return for home owner associations and that’s a corporate return which is why I’m thinking it’s a national, as opposed to a state, thing.
Hi Jan.
If an LLC owns a residential rental unit in a neighborhood with a Home Owner’s Association, should the LLC issue a 1099-Misc to the HOA if HOA fees were greater than $600?
Hi Ryan,
Technically, any money that you pay to the property management company should go on the 1099MISC. For example: let’s say you paid the PM company $100 a month in management fees, but you also paid them $500 for lawn care, and another $300 for some plumbing work that was done. Altogether, you paid them $2,000. So even though you only paid them $1200 for their “service” you gave them $2,000. Write the 1099 for the $2,000. It’s their responsibility to claim the $800 that they paid to those other services as expenses.
When submitting a 1099 Misc to a property manager do I include the property management fees only? For example, there are also expenses such as clean, maintenance, etc. that the property management company deducts from th rents. I also don’t know if the work was internal labor for the property management company or if it was hired out (contracted out). Are there any additional 1099 Miscs that I need to issue for this reason beyond the property management company 1099?
Hi Margaret,
So am I. I see a lot of this. So here are some questions for you, maybe to ask them if necessary.
1. Are you leasing space to a business or to a family home? If it’s for family living space, then they don’t need to issue you a 1099 for the rent – it’s private. You still have to claim the rent as income, it’s just not a 1099 issue.
2. If you are leasing space to a business – that’s different. They need to issue you a 1099 so you should supply them with the correct information. (If you do not have an EIN number, you can get one online at http://www.irs.gov for free.)
3. Now – and here’s what I suspect is going on – if you are leasing to a private family, but they want you to issue you a 1099 from their business to reduce their taxes – well–that tells me they’re gaming the system. So they’re shady. What else is potentially shady about this tenant? That’s the question you need to ask yourself.
Now – it could be an honest mistake. Maybe they claim a home office deduction so they think they need to issue you a 1099 – they don’t. They claim a portion of their rent as a business expense – but it’s a personal expense. The IRS understands that – no 1099 gets issues. And it’s only a portion of the rent.
So, the only reason they would need to issue you a 1099 as a landlord is if you are leasing out commercial space – like for an office or a store. Meaning – that family business is being run out of your building and they are not living there.
Hi … I have an applicant that is part owner in a family business. They want to put the business as the applicant and got ME to 1099 their rent .. I’m confused .
They are renters
Hi Alex,
No, you don’t need to fill out a 1099MISC, the tenant does. He should send you a 1099misc next January. What you need to do is fill out a W-9 for your tenant. Here’s a link: W9
Hello, I am a landlord and am renting my property to someone who is paying me rent thru their business as a business expense, do I need to fill out a form 1099 MiSC ? thank you
Hi Cheryl,
A security deposit is really just a refund of your own money, so a 1099 would never be issued for a security deposit refund.
Hi Peter,
You don’t do a 1099 to your landlord, you’re renting that space as an individual. You want to claim a portion of your space as a home office deduction. Form 8829.
No 1099 required.
Hi Bel,
I don’t think I’m the right person to talk to. Why does he need to file a 1099 for you? There’s nothing there. If he cheated you out of your security deposit, you should talk to an attorney. Maybe go to small claims court. But the IRS isn’t going to help you. Not about a 1099. Sorry.
Hi Ellen,
If you pay the rent to an individual instead of a corporation, then yes, you should.
ᎳOW just what I was searching fߋr. Caame here by seаrching for 1099s
Hi Carol,
I think your tenant is confused. You do not issue a 1099 to someone who pays you. You issue a 1099 to someone that you pay. But, for the home office – you do not have to issue a 1099 to your landlord for that.
Hi Renee,
When you write the checks, do you write separate checks to the landlords and the landlords’ trusts? I bet you don’t. It’s not your job to do your landlord’s accounting for him. You write the 1099 to whomever you write the check to. It’s his job to make the allocations and pay the trust or whoever. I think your landlords are being lazy.
Hi Katie,
So she sent you a 1099 for the repairs, but not the rent? Technically, she should also send you a 1099 for the rent too. But yes, she should issue you a 1099. That’s perfectly normal.
Who issues a 1099 to themselves?
I work for my landlord who owns Chicken houses. 4x 10,000 chickens in each house.
Three days a weekx$50 a day, that covers my $400 rent and my $200 electric.
Now, I want to buy a house. How do I get a loan without last 2 years proof of income?
I did a 1099 for 2016 & 2017.
PS, I owe IRS $1428.
Hi
I am looking to find out when my company is refunding a security deposit to a tenant who is an individual do I need to issue a 1099?
Hi Jan,
I rent an apartment as an individual, but I do a lot of professional freelance work from my recording studio and office space in my apartment. I would like to deduct these rooms as a business expense.
What exactly do I need to ask my landlord and what if he refuses?
With kind regards,
Peter
please help….my landlord jipped us out of our security deposit…how do i report him for not filing a 1099?…he has many rental properties that he does NOT pay taxes on….we were naive when we moved in and did not really look into WHY he did not have us sign a lease and wanted cash only….now i want to stop him before he does this to more people…he has done it to the tenants before us and now us…
As a business that rents a building for my retail store, do I have to issue the owner a 1099 for the rent I’ve paid to him?
I own a house which I rent. I am not an LLC, nor am I a business..just a landlord. My tenant has asked me to issue him a 1099 for the rent he pays, because he has a home office that he uses for his Corporation (he also has an office that he rents in another location for that business). I’ve never had to do this before, so am confused as to what he’s asking me. Can you clarify for me?
Hi Jan,
I write checks to 2 landlords but the landlord is saying I should split up the 1099 amounts between the landlords and landlords’ trusts based on ownership share. Do I issue a 1099 based on who I write the check to or write one to every owner/trust based on their membership %.
We own a rental unit and we rent to a “corporate renter”. She herself is a company that rents short term funished housing to others. She had over $700 in damages we required her to pay for last year before we would install new carpet for her. We just received a 1099 Misc from her for these damages. The damages were repaired by me and we charged her for the costs of the repairs and a few items were done by companies such as a screen door company and a general contrator. Is this the form for her to have sent?
Dear Confused,
I’m confused too. Who issues a 1099 to himself?
If I own rental properties in an LLC am I required to issue a 1099 to a property manager who is also an LLC? When I asked for a W9 the PM responded that he would be issuing a 1099 to himself and me issuing a 1099 would be doubling up. Is this accurate?
Hi Ab,
Right, it’s only if your are the business.
Hi McGijenn,
If you are not a business then there is no need to issue a 1099. If you are a business, you should issue the 1099 for the rent and the deposit. The landlord will report that part of the money is the security deposit and part is for rent.
Hi Jan,
Thanks for your response. Sorry I should have been more descriptive. The house is owned by an LLC (partnership) and they we pay dues to the homeowners/condominium association. It is used by the owner as well as rented out for some part of the year. So based on your comment it seems we do need to issue a 1099-MISC.