Posted by Natalie-VA on March 03, 2006 at 15:35:08:
Craig,
I think the threshold is $600. You don’t send them to corporations.
–Natalie
Tax time question–handyman - Posted by Will
Posted by Will on March 02, 2006 at 19:36:16:
All right…it’s tax time! For me, 2005 was my first year of owning rental properties. I have a friend who does handyman work and I hired him on several occasions last year to do a project or to help me with a project.
I paid him in cash.
As it stands, I have not deducted those expenses on my taxes. On those projects, I deducted material costs only. I’d imagine that he was probably inexpensive enough so that I’m still ahead of the game if I don’t deduct what I paid him. Would that be the safe thing to do? What do y’all do with handyman expenses?
Re: Tax time question–handyman - Posted by ken
Posted by ken on March 03, 2006 at 17:42:55:
I pay with checks and write it off. I do not give 1099 to anyone it is only a $50 fine per person if you get caught.
Re: Tax time question–handyman - Posted by Frank Chin
Posted by Frank Chin on March 03, 2006 at 08:08:09:
Will:
I used a few guys like that.
I prepare a receipt, with the amount, and have the guy sign it. Had some guy install an entire kitchen for $2,500 labor, and he signed his name in “Chinese”. The man is illiterate, and that’s about the only thing he can manage in any language.
Got a lady that sweeps the sidewalk at $25.00/month. Been deducting that without receipts for a number of years.
Today, I have a guy repair railings broken by a tenant on moveout. Supposed to be $60.00 for me, but because it’ll be deducted from tenant deposit, the handyman made it $80.00. Again, I’ll have to make the receipt, the handyman will sign it, and I’ll show the tenant, and deduct from the deposit.
Got a plumber, and I could go receipt or no receipt. It’s a few bucks more with the receipt, PLUS sales tax. This guy does agood job, is honest, so I send him to tenant units, and he sends me the bill. I’ve been paying the higher price PLUS the sales tax, and deducting it, for years now.
Frank Chin
Re: Tax time question–handyman - Posted by Craig (IL)
Posted by Craig (IL) on March 02, 2006 at 20:04:57:
You absolutely want to get records for all those payments and apply those expenses against rental income It will help you at tax time. Doesn’t matter if you handed him cash. Just get a receipt. By the way, if you paid him over $700 (not inlcuding any direct reimbursment for supplies) in total for the year you may have to file a form 1099 with the IRS and he has to pay taxes on it. This form should have been filed by January 31st, so you may be late. If he works as a bona fide business (sounds like he doesn’t, though) I don’t believe you have to file this form.