topic Do I need to issue a 1099-misc to a contractor for my rental property? in Investors & landlords

Do I need to issue a 1099-misc to a contractor for my rental property?

richleino — Thu, 06 Jun 2019 05:17:22 GMT

This question would appear to have been answered here: https://ttlc.intuit.com/questions/2572433-what-are-the-current-requirements-for-1099-misc-i-hired-a-...

However, I was filing my taxes yesterday about my Rental Property and Turbotax asked me whether I had any repairs over $600 and, if so, whether I issued a 1099. I guess I'm confused now. Did the law change again or is Turbotax asking me a question that hasn't been fixed?

You do not. The rules you refer to were not to be implem...

bwa — Thu, 06 Jun 2019 05:17:24 GMT

You do not.

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 They were repealed by HR 4.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 2012 instructions for Form 1099-MISC contain the following:

Repeal of reporting requirements for certain rental property expenses. The requirement described in the 2011 instructions for persons receiving rental income from real estate to report payments for certain rental property expenses on Form 1099-MISC was repealed by Congress. You do not have to report those payments on Form 1099-MISC

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

So, you answered half of my question. The other half is...

richleino — Thu, 06 Jun 2019 05:17:27 GMT

So, you answered half of my question. The other half is this: Why is Turbotax Online asking me (for my 2015 taxes) whether I issued a 1099-misc for repairs that exceed $600?

Turbotax is asking the question because the IRS' Schedule...

bwa — Thu, 06 Jun 2019 05:17:29 GMT

Turbotax is asking the question because the IRS' Schedule E (and all of it's business type schedules) asks the question. There are many types of income on Schedule E, some of which may require Forms 1099.

But the question asked by Turbotax was specifically in...

richleino — Thu, 06 Jun 2019 05:17:32 GMT

But the question asked by Turbotax was *specifically* in the context of whether repairs on a *Rental Property* exceeded $600 and, if so, whether a 1099-misc was issued. I did not ask a general question about 1099 under schedule E, I asked a question about why Turbotax is asking me whether I issued a 1099-misc for repairs on a rental property that exceed $600. Have you looked into whether there is a problem with Turbotax or are you simply giving a *generic* response to a "specific* question?

The question on Schedule E that Turbotax is trying to get...

bwa — Thu, 06 Jun 2019 05:17:33 GMT

The question on Schedule E that Turbotax is trying to get an answer to is "Did you make any payments in 2015 that would require you to file Form(s) 1099? (see instructions)." The answer, based on the repeal of HR4, is "no" if you have passive rental income. When the program asks if you issued Forms 1099 for repairs and you didn't, just answer "no" because none are required.

Alternatively, you can file Forms 1099-MISC but you're not required to.

Thank you both--for the questions and answers. This topi...

may_christine — Thu, 06 Jun 2019 05:17:36 GMT

Thank you both--for the questions and answers. This topic has been so confusing to me. I even tried calling the IRS helpline and I still couldn't get a definitive answer. I think the key to all of this is what SuperUser just said above: Did you pay for any work that would require a Form 1099-MISC? and the answer being "no" because even if you did pay more than $600 to a contractor, if you are not a business and the rental property is an investment then you don't have to file the form. Sorry for the run-on. Excellent questions, richleino, because I, too, thought it was odd that Turbo Tax would ask me that when I am clearly using Schedule E.

Thanks for this thread - the turbotax questions in this a...

dwpluss — Thu, 06 Jun 2019 05:17:39 GMT

Thanks for this thread - the turbotax questions in this area are a little confusing/misleading. Without this thread I would have questioned if the laws changed for 2015 again.

I had the same confusion with only one rental property an...

cclayton53 — Thu, 06 Jun 2019 05:17:41 GMT

I had the same confusion with only one rental property and not otherwise in the business. I had already called a plumber for his tax ID before finding this thread! Good to know I won't need to go thru getting the form from IRS and filling it out.

Thanks to everyone!

Glass183 — Thu, 06 Jun 2019 05:17:42 GMT

Thanks to everyone!

I am glad I found this thread! The way TT 2016 asks this...

Arabella-Skywalker — Thu, 06 Jun 2019 05:17:44 GMT

I am glad I found this thread! The way TT 2016 asks this question (similar to 2015) is indeed very confusing and would make one believe they broke the law and would have to pay penalties for not filing 1099!

Thank you for this thread! It is tax time and TT 2018 is...

chohman — Thu, 06 Jun 2019 05:17:46 GMT

Thank you for this thread! It is tax time and TT 2018 is asking the same questions, and it really helps to understand the background. With only one rental property, I am relieved I don't have to do a 1099.

Re: You do not. The rules you refer to were not to be implem...

Eastpodunk — Mon, 20 Jan 2020 22:18:41 GMT

According to NOLO, all landlords must file 1099 MISCs for independent contractors:

https://www.nolo.com/legal-encyclopedia/do-landlords-need-to-file-form-1099-misc.html

Re: Do I need to issue a 1099-misc to a contractor for my rental property?

Rundspaden — Thu, 23 Jan 2020 14:07:00 GMT

I have spent a lot of time looking into this and sent the same NOLO article to an accountant. However, I believe the original answer to this thread is correct. Landlords of residential rentals do Not have to file 1099s. The NOLO article assumes a landlord wants to qualify the income she receives as “active” or business income. It would be a more accurate article if it said “all landlords wishing to designate rental income as business income” need to file 1099s. Most rentals, however, are passive income generators and therefore, they still don’t have to submit 1099s as per the original answer on this thread.

Re: Do I need to issue a 1099-misc to a contractor for my rental property?

Eastpodunk — Mon, 27 Jan 2020 14:40:57 GMT

Completely agree on the article’s ambiguity with its “shoulds”, except for the “all landlords” in the following quote: “Until now, the IRS never provided a definitive answer. However, the IRS has recently made it clear that all landlords should file Form 1099-MISC.”

Thanks for your response. Hate to keep stirring the pot, but the lack of clarity on this issue is so annoying. Have also read that contractors paid by credit card don’t require one , even if a landlord normally would be required to issue a 1099 to them. Still trying to find a reliable CPA for such questions (missed a bigger Roth conversion that I should have done last year based upon misinformation from a CPA).

Re: Do I need to issue a 1099-misc to a contractor for my rental property?

Indie518 — Fri, 07 Feb 2020 23:21:37 GMT

What if the rental property is owned by a single member LLC?

Re: Do I need to issue a 1099-misc to a contractor for my rental property?

AmeliesUncle — Wed, 19 Feb 2020 16:18:41 GMT

It does not matter if it is a Single Member LLC. That does not change anything.

In answer to the original question:

(1) If the rental activity rises to the level of a "Trade or Business", yes, a 1099-MISC is required if you pay an unincorporated business $600 or more for services.

(2) If the rental activity does NOT rise to the level of a "Trade or Business", NO, an 1099-MISC is NOT required. But you can choose to file it if you want.

Unfortunately, the phrase "Trade or Business" is not clearly defined. In some cases, courts have ruled that even a single rental property could rise to that level. In other cases, several rentals are not considered a Trade or Business. It depends on the exact facts-and-circumstances of your situation, and you may need to some extensive research to see where your rental activity falls.

Some recent Regulations on the Qualified Business Income (QBI) deduction may show a little insight to how the IRS views whether a rental activity rises to the level of a "Trade or Business". In part, that Regulation says that if at least 250 hours of work are put into the rentals (including anybody you hire to do work, such a contractors), then for purposes of the QBI deduction, it is considered a "Safe Harbor" as a "Trade or Business".

Just keep in mind that the 250 hour is ONLY a "Safe Harbor" and is ONLY for purposes of the QBI deduction (NOT for the requirement of sending 1099-MISCs). But that MIGHT give you a GENERAL idea for what the IRS would be looking at for determining if it is a "Trade or Business" or not.

If you think your situation is a "gray area", you might choose to be on the 'safe side' and file one.

P.S: That Nolo article has numerous errors, as do many other Nolo articles.

Re: Do I need to issue a 1099-misc to a contractor for my rental property?

Indie518 — Thu, 13 Feb 2020 02:19:51 GMT

What if TP is claiming active participation as a realestate professional?

Re: Do I need to issue a 1099-misc to a contractor for my rental property?

LindaB1993 — Thu, 13 Feb 2020 03:01:46 GMT

A form 1099-Misc is still issued if the payment exceeds $600.

Re: Do I need to issue a 1099-misc to a contractor for my rental property?

Indie518 — Fri, 14 Feb 2020 01:46:51 GMT

On the other hand if TP is a passive investor then the 1099 need not be issied?

topic Do I need to issue a 1099-misc to a contractor for my rental property? in Investors & landlords

Do I need to issue a 1099-misc to a contractor for my rental property?

You do not. The rules you refer to were not to be implem...

So, you answered half of my question. The other half is...

Turbotax is asking the question because the IRS' Schedule...

But the question asked by Turbotax was *specifically* in...

The question on Schedule E that Turbotax is trying to get...

Thank you both--for the questions and answers. This topi...

Thanks for this thread - the turbotax questions in this a...

I had the same confusion with only one rental property an...

Thanks to everyone!

I am glad I found this thread! The way TT 2016 asks this...

Thank you for this thread! It is tax time and TT 2018 is...

Re: You do not. The rules you refer to were not to be implem...

Re: Do I need to issue a 1099-misc to a contractor for my rental property?

Re: Do I need to issue a 1099-misc to a contractor for my rental property?

Re: Do I need to issue a 1099-misc to a contractor for my rental property?

Re: Do I need to issue a 1099-misc to a contractor for my rental property?

Re: Do I need to issue a 1099-misc to a contractor for my rental property?

Re: Do I need to issue a 1099-misc to a contractor for my rental property?

Re: Do I need to issue a 1099-misc to a contractor for my rental property?

But the question asked by Turbotax was specifically in...