General Question

2davidc8's avatar

If I pay someone more than $600 to do a job, do I have to file a Form 1099?

Asked by 2davidc8 (4173 points ) June 1st, 2012

Am I required to file a 1099 with the IRS? What happens if I don’t?

If it is optional, is there any benefit to me in doing so? (At least, I guess it ensures that the person will pay his/her fair share of taxes on the amount I paid, right?)

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17 Answers

Jeruba's avatar

Do you mean a job that’s considered work for hire or some kind of contract work, such as painting your house? or are you talking about hiring someone as your employee?

2davidc8's avatar

No, not as an employee. I mean jobs like building a deck, removing large trees, painting a house, putting on a new roof, remodeling a kitchen, etc.

Adirondackwannabe's avatar

If you pay someone $600 or more for services you’re supposed to give them a 1099 and also file a 1099 and 1096 with the IRS. The penalty if you don’t is $50 per form, last I looked.

Jeruba's avatar

@Adirondackwannabe, is that true for a householder hiring an independent contractor (such as a handyman) to do work in his home, or only for a business hiring contractors to work for the business?

Adirondackwannabe's avatar

Generally business related services.

Jeruba's avatar

So for the OP (and me), the answer is no? My husband and I are about to hire a painter.

Adirondackwannabe's avatar

You don’t rent any part of the property?

YARNLADY's avatar

I believe the answer is yes, you are supposed to supply a 1099 for work done by an independent contractor that received more than the IRS stated amount. It changes from time to time, so be sure to consult the IRS pages for the correct amount.

woodcutter's avatar

What would be the motivation for a home owner to do this? When a business does it they want documentation records of the expense so they get to write that off right? I wasn’t aware that a regular non business home owner got to claim repairs done to personal property, or even interest they pay on the note for that matter.

2davidc8's avatar

@woodcutter One motivation for an ordinary homeowner might be that certain kinds of work done on a property qualify as “improvement”. The cost of this improvement can be added to the cost basis of the property when it is sold, thus reducing the capital gains. While a contractor’s invoice and/or a canceled check may be sufficient proof for the IRS, I’m guessing that an officially filed Form 1099 would be better.

@Adirondackwannabe I wasn’t aware that there could be a penalty for not filing the form.

YARNLADY's avatar

@2davidc8 The cost of this improvement can be added to the cost basis of the property when it is sold, thus reducing the capital gains. This is the reason we do it.

Jeruba's avatar

From what I see here, I have the impression that this applies to me if I am a business owner and hire an independent contractor to perform a service for my business. When I’ve done contract editorial work for a publisher or corporation, I’ve supplied my taxpayer ID so they could complete a 1099 for me.

I can’t see where it says that if I as a homeowner hire someone to paint my house or landscape my yard, I have to file a 1099.

YARNLADY's avatar

New Info: “homeowners will have to issue 1099-MISC forms to any person or unincorporated firm with which they do at least $600 in business over the course of the year. Starting in 2012, this requirement will extend to any person or business of any kind with whom the homeowner does business at this level.”

Read more: ELLIS: More paperwork and taxes for homeowners – Washington Times

Jeruba's avatar

Thanks for the link. Here’s the preceding sentence, for context:

“The tax increase in question imposes a new paperwork-filing burden on the 10 million homeowners who rent out their second homes – ‘landlords,’ to use the preferred derogatory nomenclature of the left. Starting in about 100 days, homeowners will have to issue 1099-MISC forms to any person or unincorporated firm with which they do at least $600 in business over the course of the year.”

This article (dated 9/22/10) goes on:

“This tax increase is aimed squarely at ordinary folks who have a second home they use to generate a modest supplement to their income.”

I do not own a second home and don’t rent anything to or from anyone. I don’t see how this applies to a resident homeowner having maintenance work done on his or her own property. If I were a landlord renting property to a tenant, I would call that a business relationship and not home maintenance.

In any case, I was looking for a factual source in the language or official explanation of the law and not in an opinion piece about the law.

Kesha's avatar

I’m looking for a job that at least pays me @500 a week, someone please direct me.

Jeruba's avatar

Follow-up: I attended a presentation by a tax accountant last week and asked him this question. We happen to be in California. He said it applies to businesses. An individual who hires a contractor to do work around the house doesn’t have to file a 1099. If you’re self-employed and the work relates to your business, though, you do if you’re planning to claim it as a business expense. (Rental properties were not under discussion.) This, at least, is how I understood his answer.

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