Landlords and the IRS 1099 form

Hi folks as always we recommend you speak to your accountant about the many changing and current IRS laws affecting rental property but we wanted to bring you up to date and what we understand so you at least know to ask your accountant and not at the end of the year when its to late.

A new law passed starting this year (2011) that you must start tracking all vendors doing at least $600.00 worth of work for you.  This law to our understanding had always been on the books but it was for the bigger rental property owners and not the small guys with one or two properties.

The Small Business Jobs Act of 2010 (H.R.5297) has expanded this to all.

What it means is if you own even one rental property you have the legal obligation to obtain certain information from your vendor’s. - To our understanding -  their name, address, social security number or tax ID number and to keep a record of what you paid them over the year.

An example would be if you hired the same  plumber who came out 3 separate times each  bill being $225.00, $100.00, $300.00 it would total $625 so you would need to 1099 at the end of the year.

The IRS form W-9 can be used to request a  tax payer ID # from the vendor you used.

If it is over the amount of $600.00 total in the year you would need to issue a 1099 and failing to do so could cause you penalty from the IRS. We understand the IRS has increased its penalties also. $250.00 we hear. Also these forms need to go out by January 31 just like we receive our forms from our pay or interest statements from the bank as these vendors need to use these to complete their taxes.

Good luck happy investing and remember Stu and Misty are #1 in investment properties for managing, buying and selling as we not only mange properties but we have our own investments with over 15 years experience.