Do I create 1099 forms for contractors I use?

Question

Hello, I want to know do I need to create 1099 forms for every contractor I use when rehabbing a property or having repairs done on one of my Apartment complexes?

I am referring to the following?

• The Large company who is supplying and installing the new HVAC 
• The individual contractor who mows the lawns but has a LLC?
• The Plumber who supplies and installs items that need replacing?
• The service company who reads our Sub meters and invoices my tenants on my behalf?

I have been trying to work it via the internet but there seems to be a lot of gray, which stands to reason in the field of Tax.

I am not sure if it matters but we are an LLC.

Natalie Kolodij · Answer

Any one who isn't incorporated and is paid more than $600 you should most likely send one to.

Timmi Ryerson · Answer

I get a correct W-9 form signed before I pay anyone. I agree with Vincent Incopero that it is necessary to get material waivers and General Contractor statements which state that the contractor is responsible for paying taxes and doing withholding for his employees.  Then I do a 1099 for anyone that I pay over $600 in one year to.  I usually do not pay a contractor's employees, rather I pay the contractor.  That is what the waivers and GC statements are for...to be sure that the contractor pays his employees who then cannot come after you for payment.

Kristine Walsh · Answer

@David Lehane 1st and fore most please make sure you have a current IRS Form W-9 on file for every vendor (either business or person) you use, see below example.

https://www.irs.gov/pub/irs-pdf/fw9.pdf

This will help determine who gets a 1099 and who does not.  Regardless of the thresholds you should still collect this form on your vendors as a best business practice.  It is always better to have the form than not to have the form.

Form 1099s are not created they are a IRS generated form that you can buy at your local office supply store.  Usually your accounting software can track and help generate the forms at year end. These forms are due in January to the businesses and individuals and yes the above responses are correct usually filing 1099-Misc the general rule is $599 or more but of course with the IRS there are always little exceptions.

Below are the 1099MISC filing instructions

https://www.irs.gov/pub/irs-pdf/i1099msc.pdf

I hope this helps you can always direct message me if it is easier to discuss your questions or concerns live.

Thanks

KW

David Lehane · Answer

Hello everyone, thank you for the good advice, by not being incorporated @Natalie Kolodij do you mean who is not a company?

Sorry if this seems obvious but I am new to the states and am still getting my head around your legal terms.

I think you are saying, in essence, anyone who is self-employed, but does not have a company and I pay them more than $600 during the year, I would need to create a 1099 form for them ?

Other wise I do not need to do this.

Vincent Incopero · Answer

On the legal side of things, make sure that you get material waivers and gc sworn statements from your contractor's to protect yourself from Mechanic's/Material-man's Liens... Not all contractors get paid, and many in turn end up stiffing those who provide labor or materials. You want to manage avoidable title issues, like mechanic's liens, whenever possible.  If a contractor is not willing to provide, move along, there's plenty of contractors who are accustomed to and willing to provide these waivers.

Do I create 1099 forms for contractors I use?

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