Landlord Reporting on 1099s

Landlords will be required to issue 1099s to all service providers in 2011.  We brought this up earlier in another blog.  Any service provider paid $600 or more for services such as plumbers, yard maintenance people and yes, even tax preparers must receive a 1099.  If you pay by credit card then you do not need to issue a 1099.  If you use a management company you as the landlord, still need to issue 1099s.  The management company can issue 1099s for you but the 1099s need to show you as the issuer.   If you hire an electrician to install a new A/C unit and the cost is $1,500 the bill needs to break down the equipment from the labor.  The 1099 is only for the labor portion of the bill.  If you think you may pay someone $600 or more you need to have them complete a W9.  If you don't have a 1099 you cannot write off the expense on your tax return.  If the service provider doesn't have a valid or fails to provide a social security number or employer identification number (EIN) then they are subject to 25% backup withholding tax.  The landlord can be required to pay the withholding even if they did not withhold the money.  If you have any questions please call us at 796-1040.