There's a new law that affects owners of even just one rental property starting in 2011. It's a law that has applied to larger rental property owners in the past but, now under the Small Business Jobs Act of 2010 also applies to the smaller investor. It's important that owners know they need to track all the payments they make to vendors in 2011. If throughout the year you pay more than $600 (cumulative) to any vendor who provides a service and doesn't receive a W-2 form from you, you now have to issue them an IRS 1099 form reflecting the income you paid them during the year. Sample services include painters, plumbers, electricians, maids, lawn service accountants, handymen, carpet cleaners etc.
There are exceptions to this law and you should always consult with your accountant on tax questions. For many small owners this is coming as a surprise. A review of record keeping and implementing a system to track all vendor payments is most likely in order to remain in compliance. Late filing or failure to file all together can result in a penalty of up to $250.
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