Hello Everyone! I am looking for some advice regarding the 1099 / 1099-NEC tax forms and whether or not I must issue these to contractors for my specific rental property. I currently own just one property (a duplex) and it is owner-occupied, I live in one unit and my tenants rent the other unit from me. I bought my home at the very end of 2021 but really didn't do any work on it or collect rent in 2021. 2022 is when I really started to do work on the rental side/unit of my property. I did a lot of repairs myself but also hired a few skilled contractors for things like electrical work and plumbing. I did pay these contractors over $600 for their services and all of this work was for the rental unit, not my personal/living unit. Note: This all pertains to the 2022 tax year and I still have a W-2 job which is the main source of my income.
Given I've only owned a rental for one year (also my first home ever) and I'm very new to rental-related taxes, I of course hired a "good" tax advisor/CPA to help ensure I stay out of trouble with the IRS. I actually hired this tax company in the Fall of 2021 to do my 2021 return and continued using him for this year (2022 return). So from the start, I have had a tax guy in my corner who I thought would help ensure my taxes were done properly... or so I thought.
Now jumping to the here and now, my tax guy is in the middle of my 2022 return and I have been asking him questions back and forth for weeks and making sure he has everything he needs from me. Then just yesterday, I come across the 1099 / 1099-NEC form requirements online from my own research. I immediately reach out to him asking if 1099s apply to me and whether or not I needed to send these to my contractors (as mentioned above). He responds informing me that I indeed needed to issue 1099s and this was required to be sent out by 1/31/2023. In addition, he also informed me he is not on contract to render me 1099 filing support and basically said I'm not going to help you, good luck on your own. Fair enough that he's not on contract for that, but it really would have been great if he could have informed me that this was a thing and that there was a deadline. Now It appears I am in trouble and at the very least will be looking at late penalties for not filing by 1/31/2023.
* This is where the crux of my question comes to... Since my tax guy is of no use, I reached out to a friend who works for a different tax group/CPA and this new firm was kind enough to look into my predicament. After a phone call with this new tax company, they informed me that I actually DO NOT need to issue 1099s for my specific situation. And furthermore, they said they have never had any of their clients with less than three rentals send out 1099s! Their rationale is that with my W-2 income and the fact that I only have one rental unit I am not considered to be in the “trade or business of renting a property” and therefore the 1099 filing requirements don’t apply. After some digging, I found a helpful and very recent article that appears to agree with this (see link).https://www.keepertax.com/post...
At this point, I am feeling a little better because it seems I may actually be just fine (i.e. no need to issue 1099s)! But I’m still not 100% sure which is the correct answer... I still see a lot of articles online stating that I need to do 1099s. Any advice on this would be extremely appreciated! Thank you!
