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Lane
Lane, JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 11554
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I am trying to get information about providing my

Customer Question

I am trying to get information about providing my residential landlord a 1099 for rents paid. I worked from home for my job and ran my home based business from home. For both, I took a deduction for applicable portions of rents paid. I need to 1099 my previous landlord but they are unresponsive.
JA: The Accountant will know how to help. Is there anything else important you think the Accountant should know?
Customer: That way last year. I continued paying rent to the landlord until I purchased the home from the landlord this year.
Submitted: 6 months ago.
Category: Finance
Expert:  Lane replied 6 months ago.

Hi My name's Lane. I can help here.

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Only tenants in commercial leases must provide IRS Form 1099 to their landlords.

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I understand that you use the home office deduction. But that is by definition a use of a part of a residential (non-commercial) property for business purposes.

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There is no requirement that you send or that they respond in this scenario.

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Please let me know what question you have from here.

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Lane

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I have a Law degree with concentration in Tax , Estate & Corporate Law, … an MBA, with specialization in finance … a BBA, and CFP & CRPS designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, since 1986

Customer: replied 6 months ago.
Does this apply in the state of California?
Also, although I am not required, I am choosing to send the 1099. If I choose to send the 1099, must I report on the 1099 the deductible amount of rents or the total rents paid?
Expert:  Lane replied 6 months ago.

Yes, California conforms to federal code here.

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The home office deduction lets you write off a PORTION of the home that's used regularly and exclusively for business (lets say you have on room out of 5 that you use regularly and exclusively for business) that means that you deduct 20% of rent, utilities, phone and other regular home expenses.

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You would then get to deduct any specifically FOR business items such as supplies, a second business only phone line if you have one, etc.

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That's one of the reasons that you can't 1099 the landlord. Your deduction is only a portion of the rent

Customer: replied 6 months ago.
Understood. Now, for seven months, I rented this space exclusively for business. I am deducting that portion on my Schedule C as a business expense. I assume that I would 1099 the landlord for that total amount.
Expert:  Lane replied 6 months ago.

Yes, if the space was used only for business, then yes that's a "used in the trade or business" trigger for sending the 1099.

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But if this is your home the 1099 would not be appropriate. If this is office or other commercial space then you send a 1099.

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There;'s nothing that says you CAN'T if it's a home based business as you said, but they have no requirement to respond ... The best way to GET them to respond, however, (and this SHOULD be done if this is commercial space) is to send a W-9.

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https://www.irs.gov/pub/irs-pdf/fw9.pdf

Customer: replied 6 months ago.
Got it. So, if I have no Tax ID number available, would I just send a blank 1099 to the IRS showing the landlord's name and last known address? How would the IRS verify the correct Tax ID number? What do I do when I receive their notice that the tax id number is *****?
Expert:  Lane replied 6 months ago.

Yes, write "refused to provide" in the social security number space.

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And there's actually a process for this:

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You need to show htat you made a formal request FOR the W-9 (Best Practice there is to send something certified)

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The IRS will send a notice stating that the number is ***** This notice must be sent along with a backup withholding notice and W-9 form to the landlord.

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This notifies the landlord that he/she will be subject to withholding until he submits his identification number.

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(Landlord is also subject to a penalty of $50 for failure to furnish the Social Security number to you).

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Finally (may be stating the obvious) but many tmes conveying this is what gets them to give you the W-9