If you are an owner of rental property, you may need to know about some changes that will be part of 2011 filing requirements.
Part of the Small Business Jobs Act of 2010 that was passed in September includes new 1099 information reporting for rental property owners. Beginning with payments made after December 31, 2010, if you are an owner/individual and receive rental income from real property, you may have to file information returns with the IRS.
If you pay service providers $600 or more during the year for rental property expenses such as cleaning and maintenance, you will be required to issue Form 1099 to the service provider and to the IRS for 2011 and after.
From the February 2011 ‘Line Items’ update in the Journal Of Accountancy http://www.journalofaccountancy.com/Issues/2011/Feb/LineItems : “Unless the provision is repealed (two measures that also would have repealed the broader requirement of section 6041(a), as amended by the Patient Protection and Affordable Care Act, PL 111-148, failed to pass the Senate in late November), starting in early 2012, such recipients of real estate income must provide an information return (typically, Form 1099-MISC, Miscellaneous Income) to the IRS and to the service provider for payments made in the preceding calendar year for all services rendered in the course of earning rental income. Besides repairs and maintenance, for example, such payments could include those to accountants. Therefore, for payments made since Jan. 1, 2011, rental property owners will need to maintain records of the name, address and taxpayer identification number of each service provider, using Form W-9 or a similar form.”
A copy of the W-9 form can be found via the IRS website at www.irs.gov/pub/irs-pdf/fw9.pdf .
There are some exceptions, such as if the requirement creates a hardship for the owner, or if the owner is in the military, however, the IRS is in the process of creating these hardship guidelines. There are also increased penalties for failure to file this information or payee information correctly. Our staff at Blackman & Sloop can assist you with your rental property information returns and other services as well.
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