Who do you issue 1099s to?

Question

Who do you issue 1099s to? I have flipped a few houses this year and want to make sure to do everything right from a tax perspective. I know I saw where you should issue one for anyone paid over $600, but in that case I would need to send out a lot of 1099s. Would it just be for the contractors who have done more than $600 worth of work? What about people like an AC company who installed a new AC? Also, what about contractors I am no longer working with who would likely not be willing to send me a 1099 with their SS#, etc?

If it matters this is for Florida. Also if there are any accountants/CPAs out there willing to assist with tax preparation, I am in need of someone to help with business taxes and maximizing expenses/adjustments and minimizing tax requirements.

Stephen Chittenden · Answer

The company is correct, but if the name does not contain an unambiguous designation of corporate status (Inc., Incorporation, Corp., Corporation), I would ask them to provide you a Form W-9.  They should be willing to do so.  Once you get it, if the box for S Corporation on Line 3 is checked, then you do not need to issue them a Form 1099.

Stephen Chittenden · Answer

Keep in mind, that if you fail to have a EIN/SSN in hand before making the payment to a vendor for whom you are required to file a Form 1099, you are secondarily liable for 28% of the payment as back-up withholding.  Always, always, always, ask for a W-9 or at least the EIN/SSN of the payee and refuse to make the payment until you get it.  Unless the name says Corp., Corporation, Inc., or Incorporated, always ask.  When you write a check to a corporation, I would recommend including the corporate designation on the check as part of the "Pay to" line.  This will all be helpful in an audit.  Similarly, if you don't get a W-9, keep a record of how you got the TIN and the date on which you got it.

Daria B. · Answer

@Brandon Hall

...that was quick thanks...I was actually crafting an email to you. :)

Most discussions centered around the 1099 usually has to do with flipping and paying contractors. Mine is an ongoing expense and only did I think of this after reading some posts today.

I will get ready to prepare a 1099 for my lawn company. I keep separate records for both rentals, so I will send one 1099 each per property.

Brandon Hall · Answer

@Brandon M. @Daria B.

For people/companies that perform services to you, you must issue them a 1099 at year end if the annual aggregate expense is greater than $600. Corporations are excluded, however LLCs are not corporations and must be issued a 1099.

The question is: do landlords have to issue 1099s since technically income derived is passive in nature (i.e. not an active trade or business)? The answer isn't really available and I have my clients err on the side of caution by issuing 1099s where normally required.

Michael Rogers · Answer

Here is a link to a video and article I posted about how to complete a 1099-misc. It talks about who you have to give a 1099 and shows an example of how to fill out the 1099 and 1096.

https://www.biggerpockets.com/blogs/111/blog_posts/46839-how-to-file-a-form-1099-misc-for-independent-contractors

Daria B. · Answer

Yes, it is the same. The names are the people that I have been dealing with.

Stephen Chittenden · Answer

My only caution would be to make sure that the document that you have is for the company you are actually paying.  There are probably several companies with very similar names.

Stephen Chittenden · Answer

You can rely on on the Articles of Incorporation.  Treas. Reg. 1.6049-4(c)(1)(ii)(A)(2). (The rules under 6049 are incorporated by reference into 6041.  Treas. Reg. 1-6049-3(p)(1).)

Note: As always, you should consult a lawyer or other professional for guidance specific to your situation.  My thoughts here are merely informational, and do not establish any attorney-client relationship.

Daria B. · Answer

HA! No sooner than I posted I found a document filed that has their Articles of Incorporation. :-)

Daria B. · Answer

They go by Evergreen Lawn Care of Gainesville CO and have a FEI/EIN number. Since I didn't see Corp, or Corporation spelled out (is that silly or what) and only saw CO then I emailed the company and asked, which is their response above. No where on the site other than listing the officers and annual report is there a designation of 'company-type'.

Who do you issue 1099s to?

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