Originally posted by newlife30:
Well, that's what I was trying to find out...exactly what HE meant by doing that? From what I got out of it (remember, this is my first time flipping a house, so I have very limited knowledge of how the tax situation, etc. works), I believe he was saying that on the contract, we can basically make it look like I paid maybe 85% of the cost on materials, and the remainder was paid to him. Then, at the end of the year, I would only 1099 him for the cost of his labor? But I guess in that case, I would have to purchase the materials directly? So let me get this straight...when we 1099 our contractors, they're taxed on the labor & materials if they buy them? Or are they always just taxed on their labor?
To answer your last question, no. Your contractor will keep all of his reciepts for the materials he buys, just as you would and these will be expenses for him, so he will not be taxed on them. I hope that makes sense, I was trying to keep it short.
