Didn't issue a 1099

[MG26]

So I didn't issue a 1099 to a contractor.  He didn't break down the labor and materials for me. The amount is $705. Turbotax asked me if I failed to send out. I answer yes. I am wondering how this is handled. Will the IRS be notified of my mistake to trigger a possible audit or am I just penalized a $100 or what? I believe I can still claim it. In my research I find that it is commonly thought that I can't deduct it and this is not true as nothing stated in Section 162 or Cohan requires a Form 1099 to be issued for a subcontractor labor expense to be deducted. I just have to prove the expense if audited.

[AmyC]

On your business forms, it has a place to mark that you failed to send the form. You can still send it. Late would be better than never. See how to to file a 1099-MISC here. with us.

Yes, you can still deduct the expenses with your proof of payment for audit backup.

[MG26]

I can't find the place where it asks me if I need to issue a 1099 and whether I did.  I need to change the answer now that I found the itemized labor/material invoice. The question is not there anymore. Please tell me the navigation.

[MaryK4]

Go to the Self-Employment section and look for General Info, then look for Required to send a 1099

@MG26 

[MG26]

Thank you so much but I thought I answered the question for real estate rental section and not self employed section. Also, it turns out I don't have to send 1099 because I'm not a real estate professional. The 'general' area does not appear in the real estate section. Is there another place where I can check for where I said I needed to send a 1099? So sorry and thanks.

[MaryK4]

You would go to the Rental section and look for the "Did you Pay Anyone $600 or More for Work Related to This Property?"  (there is no summary page like for the self-employment).  You may need to send 1099-MISC even if you are not a real estate professional,  usually if you pay a person $600 or more for the year.

@MG26

[MG26]

Thanks again, I finally found it in the Property Profile section. I was looking in the Expense section. So the following historic question/answer by a turbotax person would not be accurate for a non-professional passive income landlord?

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I hired contractors to do repair work on my rental property in 2017. do i need to complete a form 1099-misc for this?

Recommended Answer

No, if you are a rental property who has rental property, you don't have to issue a Form 1099-MISC to contractors.

If you are listing yourself as a Real Estate Professional, and this is not considered a passive activity, you would have to issue a 1099-MISC, because this would be treated as a business rather than a rental. 

See this answer from TurboTax HelenaC:

ttlc.intuit.com/replies/5150726

By: TurboTaxIsabellaG

[MaryK4]

You are correct- you do not have to file the 1099-MISC if you are self- managing the property.  When you said Real-Estate professional, I was thinking of the Schedule C requirements.  

@MG26