1099 Repeal Gives Break to Business and Rental Property Owners
If you are a business or rental property, President Obama has cut you some slack by signing the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011.
What does that mean for you? This Act is the much awaited repeal for the 1099 reporting requirements that were expanded with two separate acts, both signed into law in 2010.
This repeal can be broken down into two separate parts:
- Business owners will no longer be required to file 1099s for aggregate payments of $600 or more made for property to any single payee, including corporations, within the calendar year.
However, business owners must still provide 1099s to service providers such as plumbers, painters, and accountants for aggregate payments of $600 or greater made within a single calendar year.
- Rental property owners will no longer be considered “in the business of renting property” for the purposes of 1099 reporting. With this repeal, rental property owners are not considered business owners and therefore are not required to issue 1099s to service providers utilized for the upkeep, management, or maintenance of their rental property.
In short, if you are a business owner and you plan on paying an individual or a sole proprietorship $600 or more for their services in 2011, you will be better off getting the individual’s information sooner rather than later.
The three main pieces of information needed for issuing 1099s can be collected by having the individual or sole proprietor fill out a Form W-4. This form requests their name or business’ name, address, and the social security number or federal identification number that the income will be reported under.
If you need more information, please contact your Anders advisor.