Do I have to complete a Form 1099-NEC for an Independent Contractor?

[charjean47]

Hello,  I have rental property and paid monies in the amount of $900 for plumbing work to an Independent contractor.  He is not an employee.  I found him online.  Do I have to prepare and send him a 1099-NEC?  Thanks.

[DavidD66]

Yes, unless the business you hired is a corporation, or an LLC that has elected S-Corp status you need to send a Form 1099-NEC.  It can be difficult to get tax IDs and related information from contractors after the fact, so I suggest you print out some blank Forms W-9, and whenever you hire a contractor have them fill one BEFORE you pay them.  

If a business fails to issue a form by the 1099-NEC or 1099-MISC deadline, the penalty varies from $50 to $280 per form in 2022, depending on how long past the deadline the business issues the form. There are maximum fines per year for small businesses. If a business intentionally disregards the requirement to provide a correct payee statement, it's subject to a minimum penalty of $570 per form in 2022 or 10% of the income reported on the form, with no maximum.

Filing it after the fact would be better than not sending.  That said, the chances that the IRS comes after you because of a single $900 1099-NEC are very, very remote.

For more information on 1099s, click on Penalties for Missing the 1099-NEC or 1099-MISC Filing Deadline

[charjean47]

I asked the business if they were and LLC and they said yes.  What is S-Corp Status.  I did not asked him about that.

[AliciaP1]

In order to provide a Form 1099, you are required to request a Form W9 from your contractor.  This form identifies the type of business you paid as well as their ID number you need to file the Form 1099 for.  Best practice would have you request this form and receive it before you make your first payment to the contractor.  But, you are only required to send a Form 1099 if your rental activity is considered a business.   

Per the IRS:

Trade or business reporting only.

Report on Form 1099-NEC only when payments are made in the course of your trade or business. Personal payments are not reportable. You are engaged in a trade or business if you operate for gain or profit.

@charjean47

[charjean47]

Thank you for your reply.  Our rentals are investments.  I filed a QBI last year because we had enough hours (over 250).  I am unable to claim QBI this year because our hours did not add up.  So, I am not a business and do not have to prepare a 1099-NEC, correct?  Does it matter that I filed a OBI last year?  I called the business back and the man gave me his EIN number but I don't want to prepare a 1099-NEC if I am not required to do so.  I called him twice and don't want to bug him.  I followed the program earlier and when it ask if we paid someone over $600, I answered YES because we paid $9xx.xx.  The program asked if I prepared a 1099-NEC and I answered NO.  I can not find this question to answer correctly, either way.  How do I go back to correct my answer?  Thank you

[ThomasM125]

Just because you don't have qualified business income (QBI) does not mean you are not a business for form 1099-NEC purposes. A rental engaged in for profit would be considered a business, so it would be wise to issue the form 1099-NEC. 

The question regarding the $600 payment to a subcontractor is in the Business Profile section, which you will see when you go to review your rental property entries.

[charjean47]

Thank you.  I was able to go to the program regarding work over $600 with your help.  I am puzzled on how to prepare this form.  I signed out of my account and signed back in.  I read that there is a down arrow next to YOUR ACCOUNT.  I do not see this.  I have Turbo Tax Premier for rental Property.  I do not have the Business program.  I tried to find the form online and read that you will be penalized if you just type in the info because the form has to be scanned.  I am at a loss.  How do I get to this form in my program and is that form ok to use or do I have to order it?  Thanks

[charjean47]

I looked up e-filing with the IRIS and it is stated that I need an IRIS TRANSMITTER CONTROL CODE (TTC).  I don't have one.  WOW.  At a loss still.  Any advice?  I have never prepared a 1099 of sorts.  We have done our own labor in the past.  Thanks

[charjean47]

I don't file a Schedule C or Schedule F and a form I was working on wanted me to link one of those forms.  We file Schedule Es each year.  I keep working on this but I am getting no where.

[PattiF]

If you are interested in printing the above mentioned form for your business, you can do so using Quick Employer Forms (QEF). QEF can be accessed when using:

• TurboTax Online- TurboTax Live or TurboTax Self Employed
• You would have to upgrade to TurboTax Self-Employed to print and E-file the 1099-NEC. You can do that through TurboTax.

Here is the link to access Quick Employer Forms.

Or you can access the QEF within TurboTax Online by:

1. Log into your TurboTax account
2. Select Tax Home 
3. Scroll to the bottom of your screen to 'your account'
4. You will see create W-2s or 1099s

If you are not e-filing, you could request from the IRS website, form 1099-NEC and Form 1096 which must be mailed into the IRS together. Form 1096 is special and printed with red ink. These forms may be available in office supply stores.

@charjean47  

[charjean47]

To prepare a 1099-NEC the program necessary costs $180.  I already paid $100 for the Premier program.

[charjean47]

I thought investment property was not a business.

[GeorgeM777]

You might consider printing out the 1099-NEC, completing it by hand, and then forwarding copies to your independent contractor and the IRS.   The deadline for submitting a 1099-NEC may have already passed; however, its arguably worse not to file such document at all versus filing it late.  Here is a link to an IRS document that relates to filing information returns, such as a 1099-NEC.  At page 9 are the procedures that relate to preparing information returns by hand.  

General Instructions for Certain Information Returns

@charjean47

[charjean47]

Thank you.  I read page 9.  Hopefully I try to do this and mail the return in.  The

Transmitter Control Code (TCC) throws me.