1099 Help (by K. [VA]) Jan 16, 2012 6:32 PM
1099 Help (by Carolyn [MO]) Jan 16, 2012 7:00 PM
1099 Help (by K. [VA]) Jan 16, 2012 7:40 PM
1099 Help (by Wallace CPM [VA]) Jan 16, 2012 7:45 PM
1099 Help (by K. [VA]) Jan 16, 2012 8:43 PM
1099 Help (by Jeromy [NJ]) Jan 16, 2012 8:59 PM
1099 Help (by K. [VA]) Jan 16, 2012 9:24 PM
1099 Help (by Marv [IL]) Jan 17, 2012 5:59 AM
1099 Help (by Marv [IL]) Jan 17, 2012 6:01 AM
1099 Help (by John... [MI]) Jan 17, 2012 11:01 AM
1099 Help (by Andrew R. [UT]) Jan 17, 2012 1:00 PM
1099 Help (by Andrew R. [UT]) Jan 17, 2012 1:04 PM
1099 Help (by Marv [IL]) Jan 17, 2012 2:52 PM
1099 Help (by John... [MI]) Jan 17, 2012 3:25 PM
1099 Help (by Wendy [NC]) Jan 17, 2012 3:43 PM
1099 Help (by Marv [IL]) Jan 18, 2012 5:42 AM
1099 Help (by Marv [IL]) Jan 18, 2012 5:43 AM
1099 Help (by Marv [IL]) Jan 18, 2012 5:45 AM
1099 Help (by John... [MI]) Jan 18, 2012 5:48 AM
1099 Help (by Wallace CPM [VA]) Jan 18, 2012 5:55 AM
1099 Help (by QuickRick [MO]) Feb 15, 2013 2:28 PM
1099 Help (by ChrisB [OH]) Mar 18, 2013 7:01 AM
1099 Help (by Bill [TX]) Mar 19, 2013 2:02 PM
1099 Help (by K. [VA]) Posted on: Jan 16, 2012 6:32 PM Message:
Hello guys!
I am doing 1099 MISC myself for the FIRST TIME (I use QuickBooks Pro) - have numerous questions and would appreciate your help !
1. Copy A - I mail to IRS, Copy B - mail to vendors over $600, Copy C - I keep for my records ----- is it correct?
2. Office Depot's 1099 MISC instructions state that Copy C is for Payer AND/OR State Tax Department ------- do we need to mail Copy C to State Tax Department in Virginia state?
3. When I mail 1099 MISC to IRS and the vendors ---- should I use certified/registered mail? Do you use certified/registered mail service for 1099s?
4. Is there any reason I should not issue 1099 MISC myself and use an accountant? Any potential errors/risks?
Thank you for your advice! --173.50.xx.xxx |
1099 Help (by Carolyn [MO]) Posted on: Jan 16, 2012 7:00 PM Message:
I prepare 1099s with TurboTax - easy to do. And I mail them regular mail. I just got done putting stamps on mine. Many landlords don't bother wtih doing them, as there are gray areas about when they are needed. I prefer to do them.
The one time I didn't was last year, when they weren't absolutely required. I was stranded in France with a broken ankle, and I didn't have some of the information I needed accessible to me. --70.246.xxx.xx |
1099 Help (by K. [VA]) Posted on: Jan 16, 2012 7:40 PM Message:
Carolyn, thank you!!! Do you issue 1099s to Corporations (Inc.) - just in case? What do you do with copy C?
Last year I used CPA for 1099s - I was told 1099 MISC was required... --173.50.xx.xxx |
1099 Help (by Wallace CPM [VA]) Posted on: Jan 16, 2012 7:45 PM Message:
3 copies only in VA - state does NOT get a copy.
1 for IRS
1 for recepient
1 for your records.
Mail to recepients by end of Jan
Wait until the end of Feb to see if they request a correction
Mail IRS copy with the transmittal by the end of Feb * ONLY USE THEIR TRANSMITTAL * DO NOT PRINT FROM IRS website as it can not be scanned --184.2.xx.xxx |
1099 Help (by K. [VA]) Posted on: Jan 16, 2012 8:43 PM Message:
Wallace CPM,
*Very helpful post* - thank you!!!
I am also confused with the tax classifications from W-9 forms - to which vendors should I issue 1099 MISC:
1. Individual/Sole proprietor
2. C Corporation
3. S Corporation
4. Partnership
5. Trust/estate
6. Limited Liability Company
And, should I issue 1099 MISC to Home Owners Association that I pay monthly HOA and condo fees?
Thank you very much again!
--173.50.xx.xxx |
1099 Help (by Jeromy [NJ]) Posted on: Jan 16, 2012 8:59 PM Message:
It seems there is a confusion about the filing requirement of 1099 misc for a landlord who paid more than $ 600 in 2011 to a contractor or a corporation. I had a discussion with an experienced CPA with a large CPA firm in NJ on this matter.
I was told and shown most recent IRS documents which clearly repealed this requirement for a person reporting rental income unless the person is otherwise engaged in the trade or business of renting property. I was advised it is not necessary to file 1099 misc in 2011 as I am not considered in the trade or business.
Check with your trusted CPA or Accountant regarding the most recent repeals on the expanded reporting requirement. --71.188.xx.xx |
1099 Help (by K. [VA]) Posted on: Jan 16, 2012 9:24 PM Message:
Thank you, Jeromy!
Just to make sure - if I manage my properties under LLC then I am engaged in "the business of renting property" and must issue 1099 MISC, correct? --173.50.xx.xxx |
1099 Help (by Marv [IL]) Posted on: Jan 17, 2012 5:59 AM Message:
Agree with Jeromy. Landlords do not need to send out 1099s. --173.15.xx.xxx |
1099 Help (by Marv [IL]) Posted on: Jan 17, 2012 6:01 AM Message:
Property manager does need to send 1099s, a landlord does not. --173.15.xx.xxx |
1099 Help (by John... [MI]) Posted on: Jan 17, 2012 11:01 AM Message:
We have this discussion over and over again. It always goes like this:
Someone: Do we need to send 1099s?
Wallace: Yes, to individuals. Just like we have always had to do.
Someone Else: I thought all that was repealed.
Wallace: No, just the NEW stuff that was going to require 1099s for EVERYONE (including corporations) was repealed. The part that has been in place for years and years is unchanged -- and that part requires 1099-MISC to be sent to individuals that you paid over $600 to.
Marv: Nope. LLs don't have to send any 1099s at all.
---
We have this discussion over and over again here. I always ask Marv and Wallace to try to come to some agreement and then no one ever answers again. It's sad that we have two knowledgeable CPAs here on the site and even the two of them can't come up with the same answer to this question! I don't know how LLs are expected to know the answer when two CPAs that are directly involved with this sort of business can't even come to the same conclusion!
I just wish the two of them would discuss it as CPAs and then come to an agreement. This doesn't seem that complex. Either we do or we do not need to send 1099-MISC to INDIVIDUALS that we paid over $600 to. Wallace says we do because it is old law that has been in place and was not repealed. Marv says that we don't. :(
- John...
--216.111.xxx.xx |
1099 Help (by Andrew R. [UT]) Posted on: Jan 17, 2012 1:00 PM Message:
2011 - Here it is with citations:
Standard Federal Tax Reporter (2012),35,836.03,Payments in Course of Trade or Business: General exclusion from Form 1099
However, for information returns required under Code Sec. 6045(f) relating to payments to attorneys, special rules apply. For payments made after 2006 to attorneys, information returns may be required to be filed under both Code Sec. 6041 and Code Sec. 6045. If the payment is made to the attorney for the benefit of the client, Code Sec. 6041 requires reporting with respect to the client, and Code Sec. 6045(f) requires reporting with respect to the attorney ( Reg. §1.6041-1(a)(1)(iii)).
The information-reporting requirements of Code Sec. 6041 are inapplicable to tips, which are reported by the employee to the employer in accordance with Code Sec. 6053(a) ( Code Sec. 6041(e); see ¶36,465.022).
In addition, no report on Form 1099 is required for the following ( Reg. §1.6041-3):
(1) Payments of wages and other employee compensation reported on Form W-2;
(2) Income taxes withheld from wages, tips, annuities, supplemental unemployment compensation benefits, certain gambling winnings and third-party payments of sick pay reported on Form W-2; and FICA taxes and income taxes withheld reported on Form 941;
(3) FICA taxes and any income tax withheld at the employee's request on wages paid to household employees reported on Form 1040, Schedule H; FICA taxes on farm workers; and taxes on wages of household employees in a private home on a farm operated for profit reported on Form 943;
(4) Payments to a corporation, except payments to a corporation for attorneys' fees and payments to a corporation that provides medical and health care services, other than payments to a hospital or extended care facility operated as an exempt organization (under Code Sec. 501(c)(3)), or operated by the United States or other governmental entity;
(5) Payments of bills for merchandise, telegrams, telephone, freight, storage and similar charges;
(6) Payments of rent made to rental agents (however, effective January 1, 2003, the agent is required to report payments of rent to the landlord, Reg. §1.6041-3(d));
(7) Payments of earned income for services rendered outside the United States by a U.S. citizen if such amounts would be excluded from gross income under Code Sec. 911;
(8) Compensation and profits paid or distributed by a partnership to the individual partners reported on Form 1065;
(9) Payments of commissions to general agents by fire insurance companies or other companies insuring property;
(10) Advances, reimbursements or charges for traveling and other business expenses of an employee who accounts to his employer for such expenses;
(11) Amounts paid to persons in the service of an international organization for travel or other ordinary and necessary expenses;
(12) Payments of interest on obligations of the United States or other governmental entity;
(13) Payments by a broker to his or her customer;
(14) Awards to informers or similar payments made by a governmental entity or by nonprofit organizations;
(15) Interest payments by bankers on negotiable time certificates of deposit;
(16) Payments of interest on corporate bonds;
(17) Payments to individuals as scholarships or fellowship grants; and
(18) Per diem paid by the U.S. government to certain nonresident alien trainees.
Exclusion for foreign-related items. Information reporting is not required for certain foreign-related items ( Reg. §1.6041-4), including:
(1) Payments that a payor can, prior to payment, associate with reliable documentation to treat as made to a beneficial owner or to a foreign payee. However, such payments may be reportable under Reg. §1.1461-1(b) and Reg. §1.1461-1(c).
(2) Payments of amounts from sources outside the U.S. made by a non-U.S. payor or non-U.S. middleman outside the U.S.
(3) Amounts paid by a foreign intermediary that it has received in its capacity as an intermediary and payments made by a U.S. branch of a foreign bank or of a foreign insurance company that are associated with a valid withholding certificate.
(4) Amounts paid with respect to notional principal contracts that the payor may treat as effectively connected income of a foreign payee.
(5) Payments during the period that the amounts paid represent blocked income as described in Reg. §1.1441-2(e)(3).
Payments to distressed homeowners. Payments made to or on behalf of financially distressed homeowners under State Programs, the Department of Housing and Urban Development's Emergency Homeowners' Loan Program (EHLP), and any existing state program receiving funding from the EHLP (the substantially similar state programs or SSSPs) are not subject to these reporting requirements. Because these payments are excluded from the gross income of the homeowners they are not fixed or determinable income, and payors do not file information returns or furnish copies to homeowners for payments made under the State Programs, the EHLP, or the SSSPs ( Notice 2011-14). --168.178.xx.xxx |
1099 Help (by Andrew R. [UT]) Posted on: Jan 17, 2012 1:04 PM Message:
Here is some more:
2011 Tax Legislation: Law, Explanation & Analysis,¶110,Information Reporting for Rental Property Expense Payments
Summary
The general information reporting requirement for payments of $600-or-more is repealed for a person reporting rental income from real estate, unless the person is otherwise engaged in the trade or business of renting property.
Background
An information return is generally required, under Code Sec. 6041(a), to be made by a person (payor) engaged in a trade or business who makes certain payments aggregating $600 or more in any tax year to another person (payee) in the course of the payor’s trade or business. This filing requirement is commonly known as the "$600-or-more" rule. Code Sec. 6041(a) provides generally that information returns under Code Sec. 6041 are to be furnished under the regulations and in the form and manner and to the extent as may be prescribed by the IRS. The information return must be filed with the IRS and corresponding statements must be sent to each payee. Form 1099–MISC, Miscellaneous Income, is generally used for this purpose, although Form W-2, Wage and Tax Statement, is generally used for payments to employees (Reg. §1.6041-1(a)(2)).
By its terms, the requirement under Code Sec. 6041(a) that persons engaged in a trade or business report certain payments does not apply to persons engaged in a passive investment activity, such as those whose rental real estate activity is not a trade or business. The Creating Small Business Jobs Act of 2010 (P.L. 111-240) expanded information reporting to specifically cover these persons.
Effective for payments made after December 31, 2010, a person receiving rental income from real estate is considered to be engaged in a trade or business of renting property for purposes of the information reporting requirements of Code Sec. 6041(a) (Code Sec. 6041(h)(1), as added by the 2010 Jobs Act). Thus, if a person receiving rental income from real estate makes payments, totaling $600 or more beginning in 2011, to a service provider in the course of earning rental income, then that person (payor) is required to report the payments by filing the appropriate information return with the IRS and providing a copy to the service provider.
The treatment of a person receiving rental income from real estate as a person engaged in a trade or business of renting property (and thus subject to the reporting requirement) does not apply to:
any individual, including any individual who is an active member of the uniformed services or an employee of the intelligence community (as defined in Code Sec. 121(d)(9)(C)(iv)), if substantially all rental income is derived from renting the principal residence (within the meaning of Code Sec. 121) of the individual on a temporary basis;
any individual who receives rental income of not more than a minimal amount, as determined under regulations prescribed by the IRS; and
any other individual for whom the requirements of Code Sec. 6041 would cause hardship, as determined under regulations prescribed by the IRS (Code Sec. 6041(h)(2), as added by the 2010 Jobs Act).
NEW LAW EXPLAINED
Information reporting required for rental property expense payments of $600 or more repealed.— The general information reporting requirement for payments of $600 or more does not apply to persons who receive rental income from real estate who are not otherwise engaged in the trade or business of renting property. The treatment of a person as engaged in a trade or business for purposes of the reporting requirement, based solely upon the receipt of rental income from real estate, is repealed (Act Sec. 3 of the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 (P.L. 112-9), striking Code Sec. 6041(h)).
Compliance Tip
The Instructions for the 2011 Form 1099-MISC reflect the now-repealed requirement to report rental expenses payments by all persons receiving real estate rental income because the requirement was to be effective for payments made after 2010. Payors should disregard these instructions if the IRS does not issue amended version of Form 1099-MISC. The repeal of the reporting rental expense payments for all persons receiving rental income has come well in advance of the due dates for 2011 Form 1099-MISC, which must be provided to the recipient by January 31, 2012, and filed with the IRS by February 28, 2012 (or April 2, 2012, if filed electronically). Payors, however, must keep detailed records throughout the year to provide accurate Form 1099s and so have experienced additional recordkeeping requirement from the beginning of 2011.
Comment
A Treasury Department report on reducing the federal tax gap states that the reporting requirement for taxpayers receiving rental income would improve compliance and minimize errors, and make the reporting requirements for taxpayers engaged in rental real estate activities consistent with the requirements for other business taxpayers (Update on Reducing the Federal Tax Gap and Improving Voluntary Compliance, July 8, 2009, ttp://www.irs.gov/pub/newsroom/tax_gap_report_-final_version.pdf). The provision, however, was controversial and thought to impose an increased compliance burden for small landlords and the "little guy" (see National Realtor Association (NRA) Issue Brief, Information Reporting IRS Form 1099, ttp://www.realtor.org/fedistrk.nsf/c2c6e17e27e92119852572f8005cd953/540a38f177800fc6852577ae0069fcd4?OpenDocument.
Comment
The general information reporting requirement for payments of $600 or more was expanded to apply to corporations (other than tax-exempt organizations), and to include gross proceeds paid for property, for payments made after December 31, 2011. For an explanation of the repeal of these rules, see ¶105.
ºEffective date. The provision applies to payments made after December 31, 2010 (Act Sec. 3(b) of the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 (P.L. 112-9)).
Law source: Law at ¶5075. Committee Report at ¶10,020.
--168.178.xx.xxx |
1099 Help (by Marv [IL]) Posted on: Jan 17, 2012 2:52 PM Message:
I guess if you read "new law explained", it says that no 1099s need to be filed. --173.15.xx.xxx |
1099 Help (by John... [MI]) Posted on: Jan 17, 2012 3:25 PM Message:
But Wallace keeps saying that all that repeal talk refers only to the NEW requirement that had been enacted that required them for EVERYONE. She keep saying that the ORIGINAL requirement -- from YEARS AGO -- to issue 1099-MISC to any individuals STILL applies to us.
Is that correct, Wallace? What about that, Marv? Are you saying that the repeal mentioned above applies not only to the most recent changes (i.e. within the last year or two), but also do the pre-existing requirement that has been in place for years that would require a 1099-MISC for at least individuals?
(Now, just to update everyone here... What we normally get is a statement from someone stating that the old one never applied to us either because Landlording isn't a "business" by IRS standards -- and then the other will disagree with that. So, hopefully, we don't get that response here...)
- John...
--216.111.xxx.xx |
1099 Help (by Wendy [NC]) Posted on: Jan 17, 2012 3:43 PM Message:
Landlording might not be a business but I claim RE Pro because I *can* and so avoid the passive loss deduction limit. So ...
Do I need to send 1099s????? I'm a landlord who has 23 doors and I manage them all. We spent easily the required hourly minimum per year, and claim full credit for losses etc.
NOW...do I need to send 1099s? --173.25.x.xxx |
1099 Help (by Marv [IL]) Posted on: Jan 18, 2012 5:42 AM Message:
According to the IRS, a landlord was never in business and was not required to prepare 1099s even though many of us did. The healthcare act said landlords ARE in business and thus have to send 1099s. The requirement to send 1099s was repealed. --173.15.xx.xxx |
1099 Help (by Marv [IL]) Posted on: Jan 18, 2012 5:43 AM Message:
To the best of my knowledge, a real estate pro does not have to send 1099s either.
Property managers do have to send 1099s. --173.15.xx.xxx |
1099 Help (by Marv [IL]) Posted on: Jan 18, 2012 5:45 AM Message:
for clarification:
I believe Wallace is a certified property manager not a CPA.
I am an enrolled agent not a CPA. --173.15.xx.xxx |
1099 Help (by John... [MI]) Posted on: Jan 18, 2012 5:48 AM Message:
Ok -- thanks for the clarification.
- John...
--216.111.xxx.xx |
1099 Help (by Wallace CPM [VA]) Posted on: Jan 18, 2012 5:55 AM Message:
To individuals - not corporations, real estate brokers....you need their SS# or tax ID.
Most HOAs are tax exempt corporations so they do not get them. --184.5.xxx.xxx |
1099 Help (by QuickRick [MO]) Posted on: Feb 15, 2013 2:28 PM Message:
When in doubt, send them. Chances are that the cost of preparing and mailing the form is much less than the penalty for not having filed them when you should have and getting caught. --68.184.xxx.xx |
1099 Help (by ChrisB [OH]) Posted on: Mar 18, 2013 7:01 AM Message:
So, with all of the LL's here, no one has been audited and told they had to file 1099s? Has anyone called the IRS about it? --70.62.xx.xxx |
1099 Help (by Bill [TX]) Posted on: Mar 19, 2013 2:02 PM Message:
Called the IRS about it?! What makes you think I would bank on what one of their call center hacks would say? Call 3 times and get 3 different answers, and we have no remedy for them providing advice that is flat out wrong.
In the eyes of the IRS, if you are a LL, you do not have a business - you have passive income! BTW, that is why we were not allowed the Sec. 179 deductions.
Marv - please correct me if I am wrong.
--71.158.xxx.xxx |
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