The Tax Cuts and Jobs Act signed was signed into law in December 2017. One of the most significant provisions of the new tax bill was the creation of §199(A) of the Internal Revenue Code, which is a provision meant to benefit small business owners who pay tax on the profit from their business on their personal return by allowing a 20% credit on those profits. It was unclear whether landlords with profits from their rentals would be entitled to that new credit.
The IRS released final regulations regarding 199(A) on January 18th, and one of the differences between this and all previous guidance they had issued is that they made it clear that most landlords (other than those who rent on a triple net basis) will likely qualify for the §199(A) credit, as long as they are operating their rental as a trade or business.
However, the IRS additionally made it very clear that if you treat a rental activity as a trade or business for the purposes of §199(A), the activity would need to be also treated as a trade or business in other areas. This potentially includes the requirement to issue a 1099MISC for any unincorporated service provider or individual that you paid more than $600 to in 2018, though that issue wasn't specifically addressed in the regulations. Historically, landlords generally weren’t required to issue 1099MISC.
As a precautionary measure, Turner's Tax Service is recommending that you issue 1099MISC to any unincorporated business or individual that you paid more than $600 to in 2018 for services (not merchandise or products) related to your rental. 1099MISC for 2018 are supposed to be in the mail and also e-filed with the IRS by 1/31/19, and late filing penalties can be imposed for filing late. If you need to issue 1099MISCs, Turner's Tax Service can prepare them for you, or there are any number of online vendors who provide this service if you prefer to handle them yourself. For assistance with 1099MISCs please contact the office at 530-626-8551 no later than Friday, January 25. You will need to provide the name, address, Social Security number or Employer Identification Number of the vendor you paid as well as the amount paid.
The IRS released final regulations regarding 199(A) on January 18th, and one of the differences between this and all previous guidance they had issued is that they made it clear that most landlords (other than those who rent on a triple net basis) will likely qualify for the §199(A) credit, as long as they are operating their rental as a trade or business.
However, the IRS additionally made it very clear that if you treat a rental activity as a trade or business for the purposes of §199(A), the activity would need to be also treated as a trade or business in other areas. This potentially includes the requirement to issue a 1099MISC for any unincorporated service provider or individual that you paid more than $600 to in 2018, though that issue wasn't specifically addressed in the regulations. Historically, landlords generally weren’t required to issue 1099MISC.
As a precautionary measure, Turner's Tax Service is recommending that you issue 1099MISC to any unincorporated business or individual that you paid more than $600 to in 2018 for services (not merchandise or products) related to your rental. 1099MISC for 2018 are supposed to be in the mail and also e-filed with the IRS by 1/31/19, and late filing penalties can be imposed for filing late. If you need to issue 1099MISCs, Turner's Tax Service can prepare them for you, or there are any number of online vendors who provide this service if you prefer to handle them yourself. For assistance with 1099MISCs please contact the office at 530-626-8551 no later than Friday, January 25. You will need to provide the name, address, Social Security number or Employer Identification Number of the vendor you paid as well as the amount paid.
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