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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
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Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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I remodeled my home a few months ago. I hire a local handyman

Resolved Question:

I remodeled my home a few months ago. I hire a local handyman to do the repairs with this crew. I would pay him for the stuff he was doing as he did it. To finish the final part of the project I gave him a bigger sum. When we sat down to see how much the project had cost me and what his wages were, he didn't want to give me the receipts. He said he needs them for his income tax at the end of the year and also to show the IRS where those deposits he made came from... since I'm the one that actually made the investment, aren't I the legit owner of these receipts and such? Should I not be the one claiming those expenses to the IRS for my income tax return?
Submitted: 10 months ago.
Category: Tax
Expert:  Megan C replied 10 months ago.
Hello! I am a CPA here to assist you with your tax questions. My goal is to provide you with excellent service today.

I hate to be the bearer of bad news, but the handyman does need the receipts for his taxes at the end of the year. He has to claim as income all the funds you gave him but he can deduct the cost of materials. However he should give you a copy of the receipt. It's not required but would be good business practice.

Is there anything else I can assist you with? If not, please rate my response as excellent so that I may receive credit for assisting you today.
Customer: replied 10 months ago.

Does this mean that I cannot use those for my own personal income tax?

Expert:  Megan C replied 10 months ago.
You cannot deduct the cost of the remodel in the current year. You add the remodel to your houses basis so you deduct the cost when you sell the house. Your payment to the contractor is all you need. You don't need his receipts for supplies

Please let me know if you need anything additional. If not rate as excellent so that I may receive credit for assisting today.
Customer: replied 10 months ago.

I'm sorry to ask so many things but I really don't understand. This handyman does not know anything about AC repairs. So he took the task of calling an AC person. They did the repairs and I gave cash for the handyman to pay them. He didn't deposit this to his account. Does he still need to get these receipts? What I'm trying to know is, Do I get no credit this tax year for all I have invested this year in my home? What if there was no handyman at all?

Expert:  Megan C replied 10 months ago.
Thanks for your follow up. Unfortunately, you get no credit in the current year for what you have invested in your home. You get the credit the year you sell it, not the year you pay for it.

For the HVAC repair you should get a receipt.

Please let me know if you need anything additional. If not please rate as excellent so that I may receive credit for assisting you today.
Customer: replied 10 months ago.

Ok so before I close this, If he did not do the repair himself, he should not be keeping the receipt? Am I correct?


 


If he was not the one making the repair, but I gave him the money, and he deposited the money to his account and made the payment from his bank to the company, he should get the receipt?

Expert:  Megan C replied 10 months ago.
Thanks for your question. Unfortunately he would still need the receipt. You gave him money so he has to claim that as income. He needs the receipt to deduct the cost of the repair. If he deposits money in his account he has to claim that as income.

Please let me know if you need anything additional. If not please rate as excellent so that I may receive credit for assisting you today. Thanks.
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 12693
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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