As if Landlords didn't have enough paperwork already, the I.R.S. has increased Landlords responsibilities in 2011. All payments to contractors that are more than $600 will require the Landlord to file a 1099. So, if you are a Landlord and you pay a plumber, landscaper, painter, handyman this year you better make sure you 1099 that person or company by January 31, 2012.
This law applies to both residential and commercial properties, whether you are a full-time manager of just own one unit. To comply with this law, it is important to remember to gather and record the contractors tax ID number or Social Security Number before paying the individual or company so that, you will have that information to file the 1099. Filing the 1099 with the Tax ID is now the responsibility of all Landlords and not doing so can result in a $50 fine for each 1099 not filed.
In 2012 Landlords should be ready for even more paperwork and responsibility as the law expands to cover goods as well.
I am sitting here thinking today how I will pull this one off. I guess I am going to have to find a better organizational system and bring some order out of the chaos. I am also going to have to buy more paper and stamps.