Note: edited for clarity
I am a landlord and have paid several businesses to do work/improvements on my properties. All of them are "incorporated" businesses, so my understanding is that I do NOT need to issue a 1099 (NEC or MISC) to them.
1) Is it correct that as long as I only paid incorporated contractors--that is, I am technically paying a corporation, not an individual (even if that corporation employs just a single person), I do not need to file/send 1099s?
2) When I first entered my data this year, at some point TT online asked me if I had paid anyone that required a 1099-nec. At that time I -believe- I mistakenly answered 'yes'. I want to be 100% certain that is set correctly (to no) in my return, however: I cannot seem to find the place that TT actually asks that question, nor can I see it in my return. So I guess my questions are
a) where is that question asked in TT online? I have run through the UI adding/editing expenses, and other sections that intuitively might be where TT asks this question with no luck.
b) Assuming I answered 'yes' (that is: I did issue one or more 1099-NEC forms), where would that affirmative be reflected in my paper return. I'm assuming TT asks that because there is some box on some form you file with eg your schedule E that indicates "yes I did send one or more 1099s to contractors", but I don't see it anywhere on my actual return. That could mean that I correctly answered 'no', or that the answer doesn't actually get included in the return, just on some worksheet, or that I'm just missing it when I review the return.
In any case, I really just want to find the place in TT online that asks the question so I can positively affirm that I answered 'no'.
Thanks very much for any suggestions!
The “general rule” is that business owners must issue a Form 1099-NEC to each person to whom they have paid at least $600 in rents, services (including parts and materials), prizes and awards, or other income payments. You don’t need to issue 1099s for payment made for personal purposes. You are required to issue 1099-NEC reports only for payments you made in the course of your trade or business.
Hello @Bsch4477 , and thank you for your reply.
So I guess I'm a little confused by your answer, because my impression was that I should -not- issue a 1099-NEC to -incorporated- businesses:
Some payments do not have to be reported on Form 1099-NEC, although they may be taxable to the recipient. Payments for which a Form 1099-NEC is not required include all of the following.
Generally, payments to a corporation (including a limited liability company (LLC) that is treated as a C or S corporation). However, see Reportable payments to corporations, later.
Since all of my payments have been to corps--that is, businesses that are "xyz, inc"--then it's my understanding that I don't need to issue any 1099 to them. Does that seem correct?
And, if you happen to know, the most important thing to me is *exactly where* in TT online is this question asked? I just cannot re-locate this question, which I had answered previously, but I cannot remember if I answered yes or no!
Thanks very much for your help!
You are correct.
I found the 1099 question by going to Business Income and Expenses >Business Profile >scroll down to “Any 1099 payments “ Then you are asked if you had any payments requiring a 1099. If yes, you are asked if you did or will file the 1099 forms. It doesn’t seem to matter how you answer the question so I wouldn’t worry about it.
Federal -> Wages and Income -> Rental Properties -> edit a property -> Property Profile -> click continue to 7th screen.
This turned out to be exactly what I needed to do to find it--thank you SO much, both respondents.
Generally, as a rental property owner you just flat out are not required to issue a 1099. Now I say "GENERALLY". If you qualify for and plan to take the QBI deduction, then I would "RECOMMEND" you issue 1099's. Note that you do not issue 1099's to an "incorporated" business. However, you do issue 1099's to an LLC (limited liability company) that has *NOT* elected to be treated like an S-Corp or C-Corp.
Typically, you have no way of knowing if an LLC has elected to be treated like a corporation or not. So if the business name ends with "LLC" you'd issue the 1099. Of course, you can always call the LLC business owner and ask them if they elected to be treated like a corporation, and if they say yes then no need to issue the 1099.
Take special note that a 1099 is only necessary if you paid more than $600 to any one person during the tax year. If you paid less than $600, then the 1099 does not have to be issued. But you most certainly can issue one if you like.
Also note that it is not common for a rental property owner to qualify for QBI. I myself have three rentals and even with all three combines I can't come anywhere close to the 250 hours requirement of being "directly involved" in the management of the properties. So I don't even bother with the QBI stuff.