New law creates tax headache for rental property owners. (tenant, house, fee)
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
New law creates big tax headache for rental property owners | Washington Examiner (http://washingtonexaminer.com/blogs/beltway-confidential/2011/01/new-law-creates-big-tax-headache-rental-property-owners - broken link)
Quote:
Thus, rental income recipients making payments of $600 or more to a service provider in the course of earning rental income are required to provide an information return (typically, Form 1099-MISC, Miscellaneous Income) to the IRS and to the service provider. This provision will apply to payments made after Dec. 31, 2010, and will cover, for example, payments made to plumbers, painters or accountants in the course of earning the rental income.
While rental property owners will not actually issue the required 1099s until early 2012, they need to start keeping adequate records of payments starting Jan. 1, 2011, so they will be prepared to issue correct 1099s. They will also need to obtain the name, address and taxpayer identification number of the service provider, using Form W-9 or a similar form.
As a property management company, we have always issued 1099s to those who do work on our properties, such as plumbers, electricians, carpet cleaners, etc. So that is nothing new for us, and I have no problem with it.
However, we were told by our accountant that we will now have to issue 1099s to property owners for whom we process rent payments. So we receive rent from tenant X, and pay that rent out to owner Y, less our management fee, and now we have to 1099 owner Y for the money we paid them. Is our accountant wrong on this?
This will surely be pitched. Obama has already stated that he will support its removal.
There is a lot of the health care bill that will be removed. Obama is going to try to keep the main parts though.
This particular thing is stupid. Even the IRS told them that all the additional people that they need to hire to process this will negate any additional revenue the administration hopes to gain. It is stupid.
As a property management company, we have always issued 1099s to those who do work on our properties, such as plumbers, electricians, carpet cleaners, etc. So that is nothing new for us, and I have no problem with it.
However, we were told by our accountant that we will now have to issue 1099s to property owners for whom we process rent payments. So we receive rent from tenant X, and pay that rent out to owner Y, less our management fee, and now we have to 1099 owner Y for the money we paid them. Is our accountant wrong on this?
No we already issue 1099's to all our property owners. Our company has done this for the last couple of years.
We also issue 1099's to all vendors if they deliver service.
The article is completely right and it is a headache for many home owners who hardly know how to handle a rental and although I'm against this new rule and regulation...it might be good for us as a property management company since we have the software to handle this fast and in a pretty easy way.
Every person living in America who has service done for them over $ 600 within the year has to give a 1099....by law!
This will surely be pitched. Obama has already stated that he will support its removal.
There is a lot of the health care bill that will be removed. Obama is going to try to keep the main parts though.
This particular thing is stupid. Even the IRS told them that all the additional people that they need to hire to process this will negate any additional revenue the administration hopes to gain. It is stupid.
Sorry but you makes it seem like Obama is against it? He came up with this!
Sorry but you makes it seem like Obama is against it? He came up with this!
No, I did not mean to imply that at all. He came up with this entire pile of crap. But in an act of bargaining, this 1099 thing is an easy one for him to give up.
The republicans have indicated that they are just going to chip away at this. The 1099 thing was specifically talked about and it was indicated that Obama will go along with its removal.
The house has said they will vote on a proposal to dump the whole thing next week but there is no way that will get through the senate and even if it did, Obama will veto it. So, this appears just to be posturing, to get it on the record so to speak. What will follow are a series of amendments removing various pieces. Obama will agree to the ones that don't touch what he feels are the key points.
It might take another election to get the right people to get rid of it entirely. To be honest, I think if Obama thinks he will lose the election over it, he will OK the removal of the whole thing.
We only issue 1099's to individuals paid above a certain amount...
Never have issued 1099's to Corporations... many, not all of the business I use are corps.
Maybe we should start sending 1099's to former tenants that left outstanding balances???
This law is otherwise known as the Accountant and Bookkeeper Full Employment Act.
My city is now requiring a copy of individual social security numbers to process the required rental unit annual registration... as does the city for the the business license for each property and does the Housing Authority to process any rent subsidy...
What a headache....we rent out our home through a property management company, they do the accounting, well worth their fee, but now, I guess, since I pay them a fee for the management, I have to file a 1099 for the money I pay them? Although the money is a deduction from the gross rental earnings----I don't get it!
That's why I hire an accountatn, guess now I have to file a 1099 for what I pay him
Let's all just barter---my home for your home, I will make up any difference with some pigs from my farm..........
I just e-mailed my CPA to see what he says about this. Doesn't make sense to me. We already 1099 all our vendors (and our owners). If owners ALSO have to 1099 these vendors, that's double reporting for the same income. Seems dumb to me! They're just worried they aren't getting every penny of income tax possible from mom and pop companies, is my thinking.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
What a headache....we rent out our home through a property management company, they do the accounting, well worth their fee, but now, I guess, since I pay them a fee for the management, I have to file a 1099 for the money I pay them? Although the money is a deduction from the gross rental earnings----I don't get it!
