Family Supplies and Labor Reimbursement

[Brice Alef]

Hi there. 

im currently renovating a triplex investment property and have some family helping out. How do I reimburse them for supplies and labor in a way that is still tax deferred?

thank you.

[Andrew Bosco]

Check with your CPA. Do you have a business ID at all? If it's cash, then you need to write yourself a check. 

[Michael Plaks]

Quote from @Brice Alef:

im currently renovating a triplex investment property and have some family helping out. How do I reimburse them for supplies and labor in a way that is still tax deferred?

Just like you would do with any non-family contractor working for you:
- get them to complete Form W9 for you, as you will need their SSNs
- have them provide receipts for materials/supplies and keep those receipts
- have a written labor agreement (how much and for what) 
- pay for materials separately from labor
- make all payments electronically rather than cash so you can trace them
- pay out of your business account, not personal
- issue them 1099s next year if you paid them $600 or more for labor (for the whole year, not per job): https://www.biggerpockets.com/forums/51/topics/1167632-expla...

 PS. And prepare for family friction from now on. :)