The IRS has issued a new law for rental property owners who have work done on their house over $600.
This is part of the Small Business Jobs Act of 2010 (Law H.R. 5297), which expanded the law from multiple family units to individual owners. They are now considered to be conducting a trade or business, requiring them to provide a 1099 to any contractor conducting work totaling over $600 on the property.
For rental property owners, you must obtain the name, address, and social security number or Tax ID number of anyone doing work on your property, and provide them with a 1099 and keep a copy for yourself.
This begins in 2011, so starting in January, your records need to be kept if you are a rental property owner.
According to a National Association of REALTORS(R) article:
The requirement applies to all independent contractors or freelance workers that typically provide services in a rental real estate context. These include plumbers, electricians, painters, cleaning services, gardeners, landscapers, accountants, and handymen—in short, virtually all service providers to the property who don’t receive a W-2 form from you and who provide at least $600 in services for the year. It’s a cumulative amount, so even if a painting job costs you only $400, you need to track it and add any other charges from that vendor to see if the total comes to more than $600, which triggers the requirement. If you are looking for affordable home painters in Kallangur Australia then you can’t go wrong with The Painter’s Touch.
Be aware of these new requirements, because fines begin at $250 per occurrence. Keep track of your expenses and what you pay your contractors, and follow the steps to make sure you are covered!