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Subject: Form 1099
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Author Messages
HanhN1
(California)

Posts:64


05/18/2009 6:49 PM  
I need good explaination. Does HOA have 1099 sent out to every individual contractors that provide services and repair for Association? If yes, the PM has those records and IRS? Can a board request to have records from IRS if PM deny or refuse to do so? Thank you in advance.
MicheleD
(Kentucky)

Posts:4491


05/18/2009 9:19 PM  
Did you pay this person more than $600 last year?

And it really would depend on how the contractor was set up.

But who are you to request to look at the forms, and what is it that you are looking for?

HanhN1
(California)

Posts:64


05/19/2009 8:46 AM  
Yes, it is more than $600. There was one that costs over 200K in two years. Members wanted to view the 1099 and compare to the canceled checks to see they are matched. If not, something was wrong.

BrianB
(California)

Posts:2803


05/19/2009 3:32 PM  
some people may be in for a lesson in IRS tax forms then... I believe that a 1099 would be used to record certain payments to contractors for goods and services, but there are several types of (possibly) common payments that are NOT recorded on a 1099... so, what you pay the contractor via a check and what you report to the IRS on a 1099 may well be different.

So, if they match, good. If they don't, that is not an automatic guarantee of wrongdoing.
MaryA1


Posts:0


05/20/2009 6:34 AM  
Brian,

This is what happens when people with no accounting (much less bookkeeping!) experience what to "audit" the books and records!
DonnaS
(Tennessee)

Posts:5671


05/20/2009 7:01 AM  

Isn't the 1099 used for wages or untaxed income such as interest earned, that has not been taxed? Unless these contractors are self employed and working for the HOA, why would the HOA send out 1099s to employees of companies?
MaryA1


Posts:0


05/20/2009 7:17 AM  
Donna,

A W-2 is used for wages and the 1099 is used for contract labor. And, yes, the 1099 is only prepared for a contractor who worked for the HOA. And I know the rule of thumb is that it only needs to be prepared if that contractor earned more than $600; however, the IRS expects the taxpayer to report every dollar of income. Therefore, it's really a good idea to issue the 1099 even if it's for less than $600.
RobertG12
(Arizona)

Posts:160


05/20/2009 7:52 AM  
Is the contractor really a business but only has one employee? Business (HOA) to business would not (IMHO) ever require a 1099.

What are you really trying to find out?
MaryA1


Posts:0


05/20/2009 8:04 AM  
Robert,

The IRS requires all employers to provide a 1099-MISC to all contractors.
RobertG12
(Arizona)

Posts:160


05/20/2009 8:13 AM  
Posted By MaryA1 on 05/20/2009 8:04 AM
Robert,

The IRS requires all employers to provide a 1099-MISC to all contractors.



Mary, my point is that some people say they are contractors when, in fact, they are businesses. I have had a business for 30 years and am a "contractor" to many companies. I never get 1099-MISC. I believe as soon as you get a business EIN number from the IRS (which most business would have) then you should not be getting a 1099-MISC.
HanhN1
(California)

Posts:64


05/20/2009 9:00 AM  
Thanks Mary. You are very knowledgable about accounting and taxes. I am glad.
DonnaS
(Tennessee)

Posts:5671


05/20/2009 9:57 AM  

Mary,
Help me here: The association hires contractors who work for a company and the HOA has to provide 1099s?. Maybe the work is being done by an employee of --say a plumbing company. No 1099s should be required. If the contractor is self employed, then I can understand it but ???? [xx(}
DonnaS
(Tennessee)

Posts:5671


05/20/2009 9:59 AM  

Lets try this again----[xx(]
SteveM9
(Massachusetts)

Posts:2924


05/20/2009 11:29 AM  
Everyone you write a check to for over $600 needs some form of 1099. You have to, per IRS rules.

- Does everyone do it? No. Rarely do companies or HOAs do this.

- Does the IRS check? Rarely. But they would in an audit. Because HOA's are not for profit, the IRS has better things to do, like going after people who owe them money.
RobertG12
(Arizona)

Posts:160


05/20/2009 12:28 PM  
Posted By SteveM9 on 05/20/2009 11:29 AM
Everyone you write a check to for over $600 needs some form of 1099. You have to, per IRS rules.

- Does everyone do it? No. Rarely do companies or HOAs do this.

- Does the IRS check? Rarely. But they would in an audit. Because HOA's are not for profit, the IRS has better things to do, like going after people who owe them money.



Steve, you make a broad brush statement that really doesn't hold. If you pay a corporation (which may have people who you think of as contractors) then you don't need to create a 1099-MISC. Thus, every check doesn't need a 1099. There are a few exceptions for corporations as defined in the IRS Instructions 1099-MISC on page 2.

In the same way you have to understand who the contractor really works for, you must also determine if the person is truly an independent contractor or really qualifies as an employee which then requires a W2.

None of this is simple based upon a label like "contractor".
MaryA1


Posts:0


05/20/2009 1:41 PM  
Donna,

If the contractor is incorporated then the HOA does not have to provide a 1099. The exception to the contractor rule is attorneys which should be provided with a 1099 whether the law firm is inc. or not. If the contract is with a company that is not incorporated, then the 1099 goes to the company not the individual employee assigned to do the work. At least that's the way I understand it should be handled.
BarbaraS
(New Mexico)

Posts:49


11/13/2009 8:37 AM  
We have a handyman. He signs a contract that he is independent and responsible for his own taxes and insurance. We assumed that he would be reporting to the IRS and we would not have to issue 1099 or W2. Are we correct in this? If not, what are the possible repercussions? We are a small (20 unit) association with minimal maintenance fees ($60/mo) and have to rely on volunteers. Our members are very senior and just two steps out of nursing homes. Any help appreciated.
AnnaD2
(Florida)

Posts:935


11/13/2009 9:10 AM  
Barbara we have the same type of set up here. But we DO issue a 1099 on him at the end of the year. If he doesn't report his income to the I.R.S. that's HIS problem. But cover your rear ends and do issue one. Otherwise you'll look like you're paying him under the table which could cause problems for you.
BarbaraS
(New Mexico)

Posts:49


11/13/2009 9:31 AM  
Not having done this before = do we use a W2 or 1099? Can we get these at the post office or must we send away for them? Send a copy to the IRS with our tax report?
AnnaD2
(Florida)

Posts:935


11/13/2009 9:38 AM  
If you use a W-2 then you have to deduct the taxes from his paycheck; if you use a 1099 then HE has to report his income and will be taxed that way.

You can go to www.irs.gov and click on "Forms and Publications" then click on "Forms by Mail". There you will see the 1099 form. You can get a lot of information from this I.R.S. website. It's official.
GlenL
(Ohio)

Posts:5190


11/13/2009 9:41 AM  
Posted By BarbaraS on 11/13/2009 9:31 AM
Not having done this before = do we use a W2 or 1099? Can we get these at the post office or must we send away for them? Send a copy to the IRS with our tax report?



You should be able to get them at any office supply store or from the IRS or the local library's often have a book of forms which you can copy; instructions are on the forms. Here is a listing of the different types of 1099's and which one to use (1099-MISC). http://www.irs.gov/efile/article/0,,id=98114,00.html

"Common sense is like deodorant--the people who need it most never use it."
MicheleD
(Kentucky)

Posts:4491


11/13/2009 10:16 AM  
Barbara:

I highly recommend you file the 1099. You can download it from the IRS site.

If he is a contractor or vendor and not an EMPLOYEE then you file the 1099.

We ran into a serious issue with this several years ago.

We had a gentleman doing our landscaping maintenance for several years when we discovered that our treasurer was NOT filing a 1099 on him.

When we installed a new treasurer and that person contacted the man for his social to update the files and fill out the forms, he threw a fit.

He said we (the board) had made an "agreement" with him that we would NOT file 1099s for the money we paid him.

Apparently two of our board members (both neighbors of this guy) told him that. One was the board VP, the other was, you guessed it, the treasurer.

We told him that we were obligated to file the 1099s and that those two board members had no formal or official ability to make such an agreement with him.

That's when he said that his rates would have to go up to pay for whatever taxes he was going to have to be paying now AND he wanted to BILL US for the amount he will have to pay in BACK TAXES if we filed for the past 3 years that he was flying under the IRS radar.

It was a mess.

We fired him and the VP quit a few months later. The treasurer had already walked away from the board a few months prior to that, which is how we found out that the 1099s weren't being filed to begin with when the new treasurer started going through the records.

AnnaD2
(Florida)

Posts:935


11/13/2009 10:37 AM  
EXCELLENT example Michelle!!!
BarbaraS
(New Mexico)

Posts:49


11/13/2009 10:57 AM  
Thank all of you. One question. If we begin now to file the 1099 are we required to file past years?
MicheleD
(Kentucky)

Posts:4491


11/13/2009 11:35 AM  
You are "required" to file for all the years that you paid someone.

We only went back 3 years in our instance, basically because it turns out our treasurer also had not filed our taxes for those years at all, much less the 1099s.

Apparently this "arrangement" had been going on from the very beginning, which was close to 7 years.

If I were you, I'd simply file for the current year. We did not want to risk a flag on ours because we were filing 4 years at a time (the past 3 and the current year).

But, that question should probably really be directed to a CPA or some other tax professional.
MaryA1


Posts:0


11/13/2009 3:49 PM  
Barbara,

I would just prepare 1099's for the current year. The original copy is mailed to the individual and a copy is sent on a transmittal form to the IRS. The 1099 is not the same as a W2. The 1099 is used to report income other than wages whereas the W2 is used to report wages paid.
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