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Do I have to provide a 1099-MISC to contractors that do work fixing up an investment house?
Hello,
I recently formed a LLC with a friend, and we purchased our first foreclosure. We will be hiring contractors to do a lot of the work fixing up the house.
Do I need to issue 1099's to my contractors? I am thinking that I do not have to issue one if I pay a corporation for a service, but what about when I directly pay an individual? What about attorneys that handle closings?
My understanding is, if this was a rental property, it would not be considered "Trade or Service" so I would not have to issue a 1099.... is it the same rule if I am buying and selling real estate and hiring contractors to do work?
We just got the house, so there was no work done in 2009, but we are about to get rolling, so I would like to know if I need to collect names/addresses/SSN's for contractors so I can issue a 1099 at the end of the year.
Thanks for the information!
4 Answers
- JssLv 71 decade agoFavorite Answer
Yes, if the payment is $600 or more. You need W-9 from the contractors. You should have got this even before making the first payment. Any further question ustaxfiling@gmail.com
- 1 decade ago
As I always advise, please confirm this answer with a CPA
Yes you are right, you do not have to provide 1099's to incorporated businesses. However, if they are individuals, or LLC's and you have paid them more than $600 for the year, then a 1099 is required.
Therefore, I would advise you to have everyone (not incorporated) that you contract to fill out a W-9 form and sign with either their Tax ID (businesses) or their Social Security number (for individuals). If at the end of the year your bookkeeping shows more than $600 paid to them, then you must submit a 1099.
- Tax ChopperLv 51 decade ago
Some people think by forming LLC that they do any thing. When you renovate house, and paid expenses such as materials, you have to have invoices, proof of payments and receipts, cancelled checks or credit cards. If you plan to claim labor cost for renovation, you should show the name, social security number and address of the reciepient and issue them 1099 MISC so the IRS accept the deductions. It is the same rule you should use for your business.
You should collect the info you stated. Also you may have to file form 1-9 by the Homeland Security Dept.
Source(s): Tax Professional - troLv 71 decade ago
any people who perform services for your company that you pay $600 or more you issue a 1099 to
you will request them to complete a W-9 for the information you will need
