Hired independent contractor's for repairs to rentals homes but i did not issue a 1099. What do I do? What will happen if I answer yes to paid for work that requires 1099 (over $600) and no , I did not issue 1099's

[DS30 · Accepted solution]

You will want to prepare and file these 1099-MISC for this independent contract work as soon as possible, even though they will be late.

There are IRS penalties associated with not filing a 1099-MISC when required and they vary from $30 to $100 per form ($500,000 maximum per year), depending on how long past the deadline the company issues the form. If a company intentionally disregards the requirement to provide a correct payee statement, it is subject to a minimum penalty of $250 per statement, with no maximum.”

In fact, the IRS requires you to affirmatively state under penalty of law, whether you have met the 1099 filing requirement.  Most small businesses complete a Schedule C as part their own tax returns.  Schedule C requires you as the payer to check the boxes on Lines I and J, stating:

• Whether you made “any payments in 2015 that would require you to file Form(s) 1099”; and
• If you checked the box for Yes, then “did you or will you file the required Forms 1099”?

For additional information about the penalty for not filing a 1099-MISC, please refer to the following link:

https://turbotax.intuit.com/tax-tools/tax-tips/Small-Business-Taxes/Penalties-for-Not-Filing-a-1099-...

The IRS requires that you file a 1099-MISC for work done for your rental properties if the amount is over $600.  This is a way for the IRS to track income to independent contractors.

You will still be able to claim an expense on under your rental for all the work performed related to these repairs (Please note that if your "repairs" were actually structural changes to the property, like a new roof or a new room, you will need to report these as capital improvements and take a depreciation expense related to this work).

For more information about rental expenses and capital improvements, please refer to this IRS link:

https://www.irs.gov/publications/p527/ch01.html

To enter your rental income and expenses in TurboTax Online or Desktop, please follow these steps:

1. Once you are in your tax return, click on the “Federal Taxes” tab ("Business" tab in TurboTax Home & Business)
2. Next click on “Wages & Income” ("Business Income and Expense" in TurboTax Home & Business)
3. Next click on “I’ll choose what I work on” (jump to full list)
4. Scroll down the screen until to come to the section “Rental Properties and Royalties”
5. Choose “Rental Properties and Royalties” and select “start’ (or “update” is you have already worked on this section)

Enter your rental property information through the TurboTax guided questions (or edit your rental property if it is already entered) until you come to a screen that is titled, Your "rental property name" rental summary. You will enter all your rental income and expenses here (screenshot)