Do you remember back in January when your tax advisor mentioned a 1099 and you had a panic attack once you found out you should’ve been keeping track of your contractors by having them complete a W-9 so that you have the necessary information to complete the 1099?
Today is your lucky day realtors and real estate investors. This is close to a mid-year reminder for you to review payments you’ve made to contractors exceeding $600 in aggregate for services performed for your business. Generally, you should be collecting the W9 from your contractor prior to them performing the service as it is more difficult to have them complete it after the job has been performed.
The W9 contains information such as the proper name of the contractor, their address, Taxpayer Identification Number and the federal tax classification of their business. It’s a simple Form that will save you from a larger tax bill.
How you ask? Without the W9 it’s more difficult to file a 1099 and without a 1099 your contractor business expense could be disallowed by the IRS.
So you've read through this and might be thinking it's common in your industry that contractors don't provide W9 information? If it's common, you might think it's ok? No worries, someday in the future I'm going to have a post about the backup withholding you're responsible to collect from your contractors if they're unwilling to provide their W9 information.
{{{This last paragraph is what might be known as a teaser! Stay tuned}}}
Happy tax planning!
Disclaimer: This blog is meant for informational purposes only and the reader should consult with their tax advisor to make sure the topic fits their financial situation.
Eric Shadowens is a CPA located in Louisville, Ky. If you’d like to reach out to him about his services his contact info is below.
LinkedIn: https://www.linkedin.com/in/ericshadowens/
Email: eshadowens@dmlo.com
Phone: 502-326-2319
