Its that time of year again, time to file those 1099s.....

[David Krulac]

We send 1099s to all un-incorporated vendors who we paid more $600 in a single calendar year. Our CPA advised that as rental owners we only need to provide 1099s for ATTORNEYS who did work for us. BUT that for non-RENTAL property like flips, like developments, like scattered lots, like any property not actually rented that ALL un-incorporated vendors need to be sent a 1099 if we paid them more than $600. We don't separate the rental expenses from the non-rental expenses, so if a say an HVAC works on both a rental and a flip for us and the yearly bill is more than $600 we send them a 1099. We do not send a 1099 to CORPORATION like electric company, Home Depot, or any other vendor that is incorporated.  (BTW I've encouraged several un-incoporated vendors to get incorporated.)

The penalties for non-compliance is that YOU as the vendee could be resposibile for the Federal Income taxes of the VENDOR.

The $600 threshold is extremely low, I pay the huy who cuts my grass more than $600 a year. I think the $600 threshold goes back to the 1960 when the minimum wage was $1 (believe it or not). At that rate the $600 threshold provided 600 hours of service at minimum wage. Today as minimum wage goes to $15 in some areas that same $600 only buys 40 hours of wages. Just to keep up with the increase in minimum wage the $600 threshold should be $9,000 threshold for 1099s.

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