1099?

[Joey Palmer]

Hi BP,

My wife and I are finishing up on our 1st completely "self" financed rehab/flip in Cincinnati. My previous rehab/buy and hold was completely financed by Wells Fargo. Wells Fargo sent a 1099 to my contractor for me.

This time there is no bank involved and thus it is my responsibility to do so. My first question is, is it necessary to send 1099 or thus a common practice to do so? Is there a possible downside to not doing so?

If it is my responsibility to do so, how does one go about it? 

Thanks in advance for your input. 

Joey Palmer

[Wayne Brooks]

You are required by IRS code to 1099 anyone you pay more than $600 to, that is not incorporated.  You should get a W-9 from anyone doing work, prior to them beginning work or at least prior to paying them, to facilitate this.  You need their legal name, SS/TIN and address, which is in the W-9.  If you don't 1099 them and submit your copy to the IRS, and are audited, your expense for that payment can be disallowed.