Tax time is just around the bend, and while this time can be stressful for anyone, it's often particularly challenging for landlords who often have to handle somewhat complicated tax preparations for multiple properties and their own small business. One area of tax prep that many landlords have questions about is what to do about contracted people that do work for them -- like plumber, electricians, maintenance workers, and more. While business owners that contract work out usually have to file 1099-MISC. forms to declare payments to workers, the issue of 1099s is rather murky when it comes to rental properties. If you want to learn more about who you need to file a 1099 form for (or if you do at all), check out some helpful information below.
Who gets a 1099?
If you're a landlord who hires vendors or contracted workers to help out on your property (or properties), then you'll most likely have to file a 1099 for the people who do that work. Some examples of contracted workers you might submit a 1099 for are landscapers, appliance repairmen, painters, roofers, and more. However, you only need to file a 1099 if you paid that worker more than $600. While you can still declare and deduct any payments made that were less than $600, you don't need to fill out and file a form. You also don't need to file a 1099 for a corporation, if you contract someone like Time Warner Cable to come out and do work on your wires or hookup, etc.
When do I not need to file a 1099?
As mentioned above, you do not need to file a 1099 form if you pay a contracted worker less than $600. Be sure to keep track of payments you make to laborers over time, since small amounts can eventually add up to more than $600 over the course of the year. Also, you do not need to file a 1099 form for any laborer that you pay with a debit or credit card. This is because your credit card company will report the payment via a 1099K form on their end. If you don't like paper work and your contracted worker or vendor accepts credit card payments, using a credit or debit card to pay for contracted work is a great way to avoid having to fill out paperwork when it comes to tax time.
How do I find, fill out, and file a 1099?
First, in order to fill out all the necessary information on a 1099 form, you need to have your contracted laborer fill out a W9. W9 forms are available via the IRS here. Make sure you collect them from laborers as they start work for you in order to avoid having to chase down contractors and have them fill out necessary forms during hectic and stressful tax time.
The 1099-MISC. forms are also available on the IRS websites, and they can be accessed here. To fill out a 1099 form, you'll need to know the amounts you paid workers, as well as their name, address, and tax number. You should also fill out a form 1096 along with your 1099s, which summarizes all the payments you made into one sum. This helps the government know how much you paid out to contracted laborers in total. You're required to mail in the 1099 forms, rather than e-mail or scan them, so make sure you give yourself ample time to prepare and mail them to the IRS.
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