My contractor is really pressing me for a 1099, although I understand that it is possible that I don't need to issue one.
So, I have 2 options: obtain the EIN for the SDIRA (which I can't find how to do on google) or tell the contractor I won't be doing it.
If I choose the latter, does the contractor merely report that they received income but they don't say where? That would seem problematic from a 'money laundering' perspective. If the contractor puts my name, then it would imply a 'prohibited transaction'. I could tell him to put "Equity Trust Company FBO {yadda yadda yadda)"
I guess my concern in telling him no (beyond I generally like to keep my good contractors happy) is that there will be unmatching income/expense in the IRS' eyes: somebody is reporting they got paid, but there isn't a matching somebody reporting they paid out.
Accountant, Enrolled Agent · Grayslake, IL · Member since 2011 · 5k+ posts · 2k+ votes
13y
Erik Kubec,
Go to the IRS web address I just posted, click on "apply online now".
Follow the prompts.
Issue the 1099 to save yourself the trouble.
As far as the IRS's job is concerned it is up to them to find this and they won't be too worried about who they were reporting income from other than that they reported all of it.
One example is that I do not receive 1099s from all of my customers.
Got to http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Apply-for-an-Employer-Identification-Number-(EIN)-Online
Real Estate Investor · Denver, CO · Member since 2012 · 83 posts · 17 votes
13y
Steven Hamilton II
Going through the site now, although I am unsure what type to select:
I choose "Trust" and then under options these seem the most likely:
"Custodian" says it is for minors or incapacitated people
"IRA" says: The IRS will only issue an EIN for an IRA trust account if the individual intends to file Form 990-T (Exempt Organization Business Income Tax Return) or Form 1041 (U.S. Income Tax Return for Estates and Trusts).
"All others" says the trust will need to file a tax return.
Real Estate Investor · Northeast TN, TN · Member since 2008 · 516 posts · 361 votes
13y
Please check with your personal attorney/tax pro before you attempt to get a EIN/TIN for your SDIRA. You did not make payments to the contractors, your SDIRA made the payments. Your custodian should issue the 1099s on behalf of the SDIRA, if they are required. It might appear to be "self-dealing" if you perform functions for your SDIRA that should be performed by the custodian.
Accountant, Enrolled Agent · Grayslake, IL · Member since 2011 · 5k+ posts · 2k+ votes
13y
Bill Walston,
Acquiring an EIN number is something he can do. He can also have any required tax returns prepared; however, the custodian would need to cut the check.
Wholesaler · Fort Myers, Cape Coral, Naples, FL · Member since 2009 · 185 posts · 33 votes
13y
Hi Erik,
I am going through the same thing. I am interested in knowing which selections you used when applying for the EIN as none of the selections seems quite right
Real Estate Investor · Denver, CO · Member since 2012 · 83 posts · 17 votes
13y
Call Equity Trust Company, they can't give tax or legal advice.
I am starting to think that since the SDIRA is not a business, then I don't need to issue a 1099 - misc. I don't personally issue a 1099 when I hire a contractor to work on my own house.
Rental Property Investor · Concord, CA · Member since 2016 · 499 posts · 219 votes
10y
Apologies for bumping an old thread. Recently joined BP and trying to learn as much as possible. This might be a very simple question to most of you so please bear with me. I am trying to get EIN and followed Steven's steps to select trust and then I am getting stuck. What do I select after Trust. The website gives me a bunch of options. Should I select "Trust (All others)"? Any help would be appreciated.