Hiring contractors for work on my rental property
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bentley
Level 1

Hiring contractors for work on my rental property

An independent contractor did work on my rental property in 2020 and I paid him $1000.  I wasn't aware that I was supposed to have him or me fill out any forms (1099-NEC, etc.).  Can I deduct $599 (instead of $1000) from my tax return without 1099-NEC or any other forms?

 

Is there a way to become 100% certain that the person I am hiring is an independent contractor?

6 Replies
ColeenD3
Employee Tax Expert

Hiring contractors for work on my rental property

You can deduct the entire amount you paid him and if you have his information, you can still issue him the 1099. Any person who is not working as an employee of a company (Rot-rooter,  ABC Roofing Co, etc) is an independent contractor.

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bentley
Level 1

Hiring contractors for work on my rental property

It won't be easy issuing him the 1099.  It's difficult to get a hold of him.  It took me 6 months just to get a receipt from him.  Adding to all that complexity is that I don't even know whether or not he is an independent contractor and how to find that out.  That's why I am content with just deducting $599 on my tax return and be done with it.  Is that OK with the IRS?

Hal_Al
Level 15

Hiring contractors for work on my rental property

You can deduct the full amount, even if you did not issue a 1099.

Landlords are not require to issue 1099 forms to service providers.

Reference: http://www.forbes.com/sites/irswatch/2013/03/06/should-landlords-be-filing-1099s-for-service-provide...

But, a landlord 1099-NEC may be required to qualify for the QBI deduction. Reference: https://www.nolo.com/legal-encyclopedia/do-landlords-need-to-file-form-1099-misc.html Most rental properties do NOT qualify for the QBI deduction. 

ColeenD3
Employee Tax Expert

Hiring contractors for work on my rental property

Where did this amount come from? You either deduct what you paid him or you don't deduct anything. The IRS will either allow it or disallow it. Deducting a partial amount of the payment doesn't fix anything.

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Critter-3
Level 15

Hiring contractors for work on my rental property

Just deduct the amount since you have a receipt for the work.  

Carl
Level 15

Hiring contractors for work on my rental property

I wasn't aware that I was supposed to have him or me fill out any forms (1099-NEC, etc.).

There is no such requirement. It doesn't exist for the typical landlord who reports their rental income/expenses on SCH E,  and never has. You have a receipt. Deduct the full amount. It's not a big deal here.

Maybe there's something special about your setup that the law requires you to issue a 1099-NEC or 1099-MISC? Sure would be interesting to know what that is.

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