SPC Tax Guide
Most people (you don’t want to be like most people) file in April most of us in syndication deals and sophisticated investors tend to extend and file in October.
I was given the following email on how to handle 1099s from my CPA that I wanted to pass along.
You are receiving this email if you had a rental property in 2017. If you did not have a rental property in 2018, you can delete this email.
Due to the new tax law that was put into effect on January 1, 2018, there is a possibility we may want to consider your rental property an active trade or business going forward due to the new Section 199A deduction. In order to be considered an active trade or business, the following 3 criteria must be met:
- You are actively engaged in the pursuit of renting the property
- You have a profit motive
- You have involvement in the activity (even limited involvement such as hiring a property manager or paying the mortgage will meet this requirement)
The 1099s rules that apply to businesses issuing these forms to their vendors and independent contractors, also apply to those with rental properties. If you contracted with a management company, you should contact your property manager and ask them to confirm that they are issuing all required 1099s to individuals or businesses who provided services to your property. If you do not have a property manager, and have made payments via cash or check (payments made via credit card do not count for this purpose) to vendors for services (landscapers, contractors, handymen, cleaning crew, etc.) that were for $600 or more in total for any one person or company, you will need to either issue the 1099s yourself or have our firm prepare these for you. If you choose to prepare these forms yourself, please provide us with copies so we can add it to your file for tax preparation. If you would like us to prepare the forms, we charge a $50 base fee plus $5 for every 1099 that must be issued.
If you would like us to process these forms, below is a list of what I need:
- A completed W-9 for the individual or business that we are issuing the 1099 to (a blank form is attached for your convenience)
- The amount you have paid to each individual or business in 2018
Please return the W-9 or vendor information and the total payments to me no later than ASPA to ensure that all of your forms are processed and delivered by the January 31st deadline. Once completed, I will email you that the 1099s are posted to your online portal so that you can distribute them. We will file them with the appropriate government agencies; you just need to make sure that you distribute copies to the vendors. If you would like us to distribute the forms directly to the recipients, there will be an extra $25 charge per form distributed, and you will need to let us know if you want us to do that when you send us the data. For any that are submitted after the January 28, 2019 deadline, a $25 per 1099 rush fee will be added to your invoice.
For 2019, it is advisable to request a completed W-9 prior to paying your vendors so that you have it on file for future reference and if needed for year-end forms.
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