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Rental Property Owners Must Issue 1099s

Posted on December 1, 2010 by Leasa Magnuson in Individual Tax

The Small Business Jobs Act not only brought with it economy stimulating additions and extensions to the depreciation expense rules explained in my October 20th blog but it also brought with it a new rule for rental property owners. In the past 1099 forms were issued from those actively participating in a business to service providers whom they paid more than $600 for services, but rental property owners were not considered to be actively participating in a business so they were not required to file 1099 Miscellaneous forms.

The Small Business Jobs Act has a provision in it that now includes owners of property who receive rental income to send out 1099 Miscellaneous forms to those who provide a service to them totaling more than $600. Common service providers to rental property owners would be plumbers, painters, carpet layers, even accountants. The forms are required to be sent in January of the year following the activity. That means for 2011 the activity needs to be tracked and the forms need to be sent by January 31, 2012.

If Congress doesn’t get their act together in 2012 the requirement will be expanded to include providers of not just services but products too (think office supplies, or fuel). That ugly rule is from the HealthCare Reform Act that Congress tries to tell us they read but now agrees that it needs to be repealed at least as it pertains to the expanded rules on 1099 reporting. The rule requires that all businesses be sent 1099s, including those that are corporations, for products & services. You can bet on another blog on that issue once Congress has decided to either repeal that ugly law or let it stand.

But for now just be aware that if you are rental property owner you need to file a 1099 form to all service providers that you paid $600 or more. The minimum penalty for each failure to file due to intentional disregard is $250.

1099 Misc, Rental Real Estate

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