Landlords & 1099’s: Are you filing accordingly?

As you may have heard, the 2010 health care legislation included a provision that required 1099 forms to be completed for all payments of goods and services from businesses totaling $600 or more. This new requirement included landlords. You may have also heard that it was subsequently repealed. As a result, there is a misconception that landlords are not required to file 1099 forms. This couldn’t be further from the truth. The old rules still apply.  

Under Internal Revenue Code Section, 6041(a) “All persons engaged in a trade or business and making payment in the course of such trade or business to another person of rent, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable gains, profits, and income” of $600 or more must report the amount, the name and address of the recipient of such payment.”

1099’s are not required to be sent to corporate taxpayers, but all unincorporated businesses. In addition, attorneys are expected to receive them for amounts paid as described above by a trade or business.  The 2011 Schedule E, where rental income and expenses are reported has two new questions:

  •  Question A      asks: “Did you make any payments in 2011 that would require you to file      Form(s) 1099?”
  •  Question B      asks: “If yes, did you or will you file all required Forms 1099?”

A landlord could easily have a Form 1099 filing requirement making these questions relevant. For example, a landlord who pays an attorney $1,000 to collect unpaid rent on their behalf would need to file a Form 1099-MISC. There are some exceptions (e.g., certain payments made with a credit card where the merchant has assigned a Merchant Category Code (MCC) indicating that reporting is not required) allowing the taxpayer to answer no to both questions A & B, on Schedule E.

If you are a rental property owner, be aware that you are not excluded from these requirements.  Contact your William Vaughan Company professional if you have questions regarding who you need to send a Form 1099 or if you need assistance with preparing them.

By: Sandra Towns, CPA/PFS, CFP

3 responses to “Landlords & 1099’s: Are you filing accordingly?

  1. Sandra: I agree with you that if you are in the business of being a landlord, 1099s should be filed. But if you are a passive investor in real estate you are not required to do so. I site the GAO article “Actions That Could Improve Rental Real Estate Reporting Compliance”. You can google this.

  2. Marven – thanks for your comment and I agree that 1099 filing is only required if you are “engaged in a trade or business”. Passive investors in real estate would not be included in that definition. The point of my post was that although the newly enacted regulations have been repealed, the old regulations still apply. And, in fact, there are additional questions on the tax forms this year for taxpayers to certify that they have complied. So, it’s a good time to make sure that you are in compliance.

  3. Hi. You can find a blank fillable 2012 1099 form here.

    http://goo.gl/H6G10I

    Please feel free to use it. You can fill out the form, save it, fax it, and email it.

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