Do you own a rental property here in San Diego? What about in anywhere in California or any other state for that matter? Guess what? If you're the owner of a single unit of rental property, starting this year you must begin tracking all your vendors doing at least $600 worth of work for you. Federal Law now requires you to send them a 1099 form.
Vendors typically include independent contractors that provide services in the real estate context - plumbers, electricians, painters, cleaning services, gardeners, landscapers, accountants and handymen.
This is not new to everyone though. Those of you who own multiple properties are already doing it. But last year when Uncle Sam enacted the Small Business Jobs Act of 2010 (H.R. 5297), it expanded this requirement to all property owners, no matter if you only own one property. Even property owners who are part timers or have property as part of their retirement, now must issue the 1099's.
As a property owner, what information should you have on your vendors? (It's actually a legal obligation). Generally, it is their name, address, social security number or tax identification number. Since the requirement takes effect for the 2011 tax year, you should have started tracking the payments you made to your vendors since Jan 1, 2011. You will need to send out the 1099 early in 2012.
There are a few exceptions to the requirement:
1. Burden: Gathering the information and issuing the forms would create a hardship for you (what constitutes "hardship" has not been defined yet).
2. Duration: The property is only a temporary rental of your own residence.
3. Income: Your income from the rental does not meet the minimal requirements (the minimal requirements have not come out yet-stay tuned).
I hope this information helps and keeps uncle Sam at a safe distance.