Thank you for this thread. I've been racking my head about this the past couple days since my parents are seniors and I want to help them make sure their taxes are done correctly.
So, none of us really knew anything about filing 1099-NECs for handymen and contractors until I just read about it last night. I tried to dig up some info online—like articles and forums—to see if they were supposed to be doing that over the past few years. It's pretty stressful that there's so much uncertainty around the topic. They’ve only got one rental property and have had the same tenant for over 15 years. They don’t have any business accounts or anything, and they only need to pay for repairs or maintenance once or twice a year. It’s about as low-key and passive as it gets!
Following rpctmc's link to nolo.com above this post I found it comforting to read this part:
"Rental ownership is an investment, not a business, if you do it to earn a profit, but don't work at it regularly and continuously—either by yourself or with the help of a manager, agent, or others."
I just wish that excerpt was directly from the IRS.gov website. Nonetheless, I will tell them to not report themselves as active participants of their rental property since they hardly have to put any work on their property. I’m the one who helps them out with the lease and finding vendors or handymen, totally free of course because I care about them a lot. I have to admit, my mom is way better at talking to tenants, so she usually takes care of that. My dad isn’t really able to help out much anymore. And I'll just make sure to start paying with a credit or debit card from now on, just in case we do get audited. I heard that if you pay +$600 to independent contractors with a credit card, you don’t have to worry about filing 1099-NEC forms because the credit card company takes care of it. Not totally sure how that works, though!
