We rent out a bedroom/bath, and last year we replaced shower and (rotting) flooring. The labor costs were about $2300. Do I need to send the contractor a 1099?

[bebu2]

I understand that landlords do not need to send out 1099s anymore, but as this is a room/bath in my home (renting out to college students), it might be a different set of rules...? I'm hoping I do not need to send the contractor a 1099.

[HelenaC · Accepted solution]

You are a landlord and you have a rental. It doesn't matter that it is only a bedroom/bath. You do not have to send Form 1099-Misc to your contractor. That rule was repealed. 

You do not need to issue a Form 1099 for investment rentals.  The rules you refer to were not to be implemented until 2012 for payments made during 2012. They were repealed by HR 4. The President signed the repeal bill on April 14, 2011. In doing so, the requirement for rental property owners to issue Form 1099-MISC no longer exists for any year.

The exception may not apply to payments made for attorney's fees, which would still require Forms 1099.

Additional information:

Those rules were repealed under H.R. 4 (P.L. 112-9) and made retroactive, as if they had never been enacted. Therefore, landlords, in the ordinary situation of renting out a house or two, do not have to issue 1099s to service providers. In that situation, you would answer “no” to the first question, “Did you make any payments in 2011 that would require you to file Form(s) 1099?” The second question (“If yes …”) can be left blank.

There are still situations where a Schedule E filer would have to issue 1099s. In general, you would have to file 1099s if you materially participate (nonpassive) in the activity. For example, if you are a real estate professional and treat the rental activities as nonpassive, you are in a trade or business and you must issue  1099s. Congress.gov  https://www.congress.gov/bill/112th-congress/house-bill/4

[bebu2]

Thank you very much for your fast reply!

[HelenaC]

Thank you for using TurboTax!

[THNSF2351]

I rent a room in my house. I remodeled my kitchen. My CPA told me that I should have sent the contractor a 1099 in January. According to your response in 2019 to a different user, that requirement changed. Is that still the case? In all states?

Thank you

[AmeliesUncle]

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@THNSF2351 wrote:

I rent a room in my house. I remodeled my kitchen. My CPA told me that I should have sent the contractor a 1099 in January. According to your response in 2019 to a different user, that requirement changed. Is that still the case? In all states?

Thank you

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Sending a 1099-MISC is not required in your situation.

A 1099-MISC is required when your "trade or business" pays for services over $600 to a non-incorporated business.   In some cases a rental can rise to the level of a "trade or business", but merely renting a room in your personal house would not rise to that level.  So a 1099-MISC would not be required.

[THNSF2351]

Thank you!

At what point does one become engaged enough for it to be considered a trade/business (i.e., at what point would I need to offer 1099s)?