5 Questions and Answers About 1099’s

Happy New Year!

Now, with that out of the way, let’s get to work.  And by work, I mean taxes.

The New Year means it is tax season again.  It’s time to close the books on 2013 and get all that paperwork together for Uncle Sam.

Part of that paperwork, is IRS Form 1099, specifically form 1099-MISC.

Why Should Landlords Care About Form 1099-MISC?

As a landlord, you are engaged in what the IRS calls a “trade or business” (I am assuming here that you are in the business to make a profit, well so is the IRS).  Therefore you are required to file form 1099-MISC. 

What Is Form 1099-MISC?

Form 1099-MISC is a form for reporting miscellaneous income to the IRS.  The IRS uses this form to help them determine how much a taxpayer made during the past year.  You are basically helping the IRS enforce the law.  The form has three parts.  One part goes to the IRS, one part goes to the payee and you keep the other part.  It’s pretty easy to fill out and the instructions can be found here.

Who Do You Fill Out Form 1099-MISC On?

You must fill out a 1099-MISC on anyone who provided you with a good or service in the past year worth over $600.  Did you have painters paint a house for $1,000?  Fill out a 1099.  Did you have a plumber do various jobs totaling over $600?  The plumber gets a 1099-MISC.  You get the picture.

One good thing, if your contractor or plumber is part of an incorporated business like an LLC, you likely do not have to file a 1099-MISC.  You can learn more here.

Will I Need Any Specific Information To File a 1099?

Yes, you will need the taxpayer’s tax identification number (TIN).  Usually this is a social security number but may not be.  To get that information you should have another form in your records, form W-9.  Get your contractors and others to fill out this form.  You can get and use form W-9 here.

When Do I have To File These Forms and Where Can I Get Them?

Yeah I know, that is two questions but they are important.  You have to file form 1099-MISC by January 31^st.  But if you want to be a good guy, file it as early as possible as your contractors may need them to get a refund.

You cannot download the forms from the internet since the IRS uses special forms for their scanners.  You have to get and use their specific forms.  You can get the forms for free from the IRS, but they often get backed up.  I would suggest going to your local office supply store.  Go now however because they will sell out.

Let me close by saying that I am not an accountant.  I am a landlord who has done their own taxes over the years.  I seek competent advice from my CPA regarding taxes, and so should you.  The above are just some highlights regarding 1099’s, please seek advice if you have further questions.