Hat tip to Scottsdale colleague Dru Bloomfield: the IRS is changing their rules for landlords. Not a huge change, but one you absolutely want to know about ahead of time. It always stinks to have to go back and create a paper trail for the IRS!
New IRS 1099 Requirements for Landlords
Starting in 2011, there is a new tax requirements for landlords. All landlords who receive $600 or more in rent for the year must send a 1099 to all service providers that the landlord paid $600 or more during the year, such as plumbers, carpenters, yard services, and repair people.
The new requirement applies to owners of both residential and commercial property. Prior to 2011, this requirement had only applied to those involved in full-time property management, but now the requirement covers all types of landlords. Landlords will need to gather federal tax ID numbers from service providers in order to file the 1099s. Failure to file the 1099s with the IRS can result in fines of $50 per 1099 not filed with the IRS. In 2012, these requirements will expand to cover providers of good to landlords.
You’ll want to ask for a completed W-9 from each of your vendors (when they do the work!) so you can issue the 1099 at the end of the year.