so, am I reading this correctly? After December 31, 2010, if I own a rental property and I pay $600+ per year for my homeowner's policy that I have to send the insurance agent a 1099-MISC?
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I think 1099s do not have to be issued to Corporations. -
My understanding of the changes in 1099 reporting is as follows:Originally posted by 94nole View Post
Year 2011: Rental of personal and commerical real property is now defined as a trade or business for 1099 reporting. Services of more than $600 provdied by an individual are required to be reported on 1099. Services provided by a corporation are not reported.
Year 2012: All trade or business payments in excess of $600 are required to be reported, whether to individuals or corporations.
The presenters in the tax seminars that I have attended lately seem to believe that an exception will probably be made for those publicly-traded corporation, such as Staples and Home Depot. And of course there will be the exception for payments made via credit card.
I personally will enjoy every minute of preparing 1099's for my rental and business clients. There is a huge underground economy out there. I pay my fair share of taxes and I want those who are not paying taxes now to join me in paying their fair share.
MaribethComment
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A penny difference
Got to watch for that penny. If you pay 600.01 or more you probably would be safe.Originally posted by solomon View PostComment
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Rentals
Every client I have who has rentals shows a loss. I had a rent house and had a small loss the first year, but ended up with a profit after the first year. How can you have losses on a rent house after the mortgage is paid for twenty or more years?Originally posted by Maribeth View PostComment
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Because the law is explicit of $600 or anything above that amount, $599 is the safe amount. This is one of the revenue raisers anticipated by the IRS so they will follow the law aggressively - that is why the penalties have been increased.Originally posted by taxxcpa View PostComment
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I'm one of the few that agree with you. I don't think that this will overburden the rental owners and I think this will hit the "underground economy". Not only is there a loss of income tax revenue but they're hard to compete with too, when you can find any handyman to put a roof on your rental for $10/hour and the legit roofing contractor is paying more than $10 in liability and work comp insurance alone.JMOOriginally posted by Maribeth View PostComment
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My 2 cents:
The more stringent reporting requirement is all nice and dandy, and yes, I am all for everyone paying their fair share of taxes BUT one thing is the reporting (probably scares the sh... out of some. Another thing is how and if IRS can handle or enforce the law.
At a recent seminar it was pointed out that we should apply for a FEIN for all rental property owners unless we/them feel comfortable having the landlords SS no. floating around.Comment
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More Difficult
I believe it is going to be more difficult having the Rental Property Owner obtaining all of the W-9 Info from the Service People. I see a lot of no information or incorrect information on the horizon. Gardeners and Landscapers will be among them, then Handymen running a close Second.
SandyComment
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Yep. Will you be passing out blank W-9's (& SS-4's) to clients? Going to need to build in some "client-education" time this year for a lot of people.Originally posted by S T View PostComment
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Yes I will. If for no other reason than to say I did. I will also give a cost of preparing the forms for them and the date I need the info if they are not going to do it themselves.Originally posted by BP. View PostJGComment
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Agree
W-9 forms are already being mailed with cover letter and being sent via email.
Even though we will be able to generate a fee of several $1-$2 - it will be a huge effort in educating our Rental Clients
Unfortunately it is not the renta/landlords clients so much that are not reportintg income, it is more likely it is the Service Providers that the rental clients are using.
I have one Landlord/Property Owner Client now, that is trying to comply, and one Service Provider already is not replying to the "Information Request"
This is just an exercise for 2010 year - however, my Property Owner client is trying to be in compliance or be compliant for year 2011.
Guess when they need work done in 2011 - without the form and information - property owner (Landlord) will just keep moving to the next Service Provider- no payments will be issued for work without the necessary info.
So now the Rental Owner can not have work completed until they receive the "Contract form for work" and also a W-9 form.
Has the government given us a "tool" to verfiy the Name and ID's ?? Probably not, and then we will receive another CP #### stating that the information on the 1099 forms is incorrect - maybe in 18 months after the fact
What a mess this is going to be ( I am thinking)
SandyComment
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Legit contractors/handymen/etc will comply. The nonreporters will either start losing work or have to cut rates way down to compete. Landlord wins.
I'm a landlord and have been for years. And yeah, I wouldn't bet a penny that all of the workers I've hired over the years reported all their earnings. Or maybe any of their earnings...well except one whose taxes I did. And he issued 1099s to anyone he hired to help on jobs.Comment
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