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Information Returns - Including Rental Property Operations
All businesses are required to send a Form 1099-MISC to non-corporate vendors of services where the total of such services total $600 for more during the calendar year. These forms are due to the vendor by January 31st following the year of payment, and due to the Internal Revenue Service by February 28th. There are two major changes to this requirement beginning for payments made during 2011 for Forms 1099-MISC filed in 2012.
Expanded Reporting – Beginning with 2011 payments, a Form 1099-MISC will be required where total annual payments are$600 or more for payments to all vendors—corporate as well as non-corporate, and for all payments, including the purchase of goods as well as the purchase of services.
The repeal or modification of the expanded Information Return reporting has strong bi-partisan support in Congress, but given the current political climate, I am not hopeful that any change will be forthcoming.
Planning for the expanded reporting will require the use of a good accounting system, such as Quickbooks, to track the payments made during the year. It will also be necessary to gather expanded vendor information, including the vendor’s tax identification number. I suggest using IRS Form W-9 for this purpose. Click her for a copy of the current Form W-9.
The second change is more subtle and has not received much publicity. The Information Return requirement applies only to businesses. The second change defines rental activities as a business for Information Reporting purposes. This means that the individual with a rental property is required to file a Form 1099-MISC for all payments to vendors where the total of the annual payments is $600 or more. This includes professional fees that are allocated to the rental properties, as well as such items as gardening and repairs. It will also include the purchase of goods, unless that requirement is repealed. Again, the advise is to be prepared by tracking the payments and gathering the information on the vendor.