Community: Message List - Hawaii Trying to Kill VRBO

Re: Hawaii Trying to Kill VRBO

community-no-reply@homeaway.com — Fri, 08 Feb 2013 05:27:47 GMT

I guess thats all open to your interpretation.

My understanding of what got repealed was the:

Under the Small Business Jobs Act, landlords will need to issue a 1099-MISC to report payments totalling $600 or more during the course of the year for any expenses relating to their rental properties. This expanded 1099 requirement will take effect beginning with the year 2011. Congress previous expanded the requirement to issue 1099 forms as part of the health care reform package, in particular requiring 1099s to be sent to corporate recipients beginning in the year 2012. The IRS will have the authority to exempt certain landlords from filing 1099s if their rental income is not more than a minimal amount or who can demonstrate that filing the 1099s would cause hardship. These exceptions are to be developed by the IRS.

The extended reporting requirements have been repealed. It's my understanding that sending 1099s to the Private Contractors you used for cleaning, and maintenance of your property (if they are not a corporation) was a requirement prior to the extended requirements and still exist even after the extended requirements were repealed.

I run my rental as a business (I have 2). I operate under a business name, use a merchant account, have business banking accounts. I would give odds that if I had a audit to go through, checking that I sent out 1099s would be part of the audit. You will notice when you fill out your Schedule C that you have to attest to having sent out all 1099s that may have been required. Given the possible ramifications, I would much rather take the 5 minutes or less to fill out & print and mail the 1099s. Registering them with the IRS only takes a click of the button. Hawaii wants theirs mailed to them. Oregon doesn't even want it unless you have at least 100 of them.

It's just like the requirement that if you are receiving rents from property in Hawaii, you have to file a State of Hawaii Income Tax return. It's just something you need to do.

BHA

Re: Hawaii Trying to Kill VRBO

community-no-reply@homeaway.com — Fri, 08 Feb 2013 03:23:31 GMT

Here's a link to the actual bill that was passed in 2011: http://www.gpo.gov/fdsys/pkg/BILLS-112hr4enr/pdf/BILLS-112hr4enr.pdf

Re: Hawaii Trying to Kill VRBO

community-no-reply@homeaway.com — Fri, 08 Feb 2013 00:57:56 GMT

@bha If you listen to the accountants, that gives you a great deal of flexibility since they have rendered opinions on both sides of the issue. Of course accountants get paid for creating 1099s.

Realtors say that 1099s are not required.

And in the 2011 IRS 1099 instructions, the IRS says:

"The reporting requirement for rental property expense payments made after December 31, 2010, has been repealed". I guess you can take that at face value or try to read more into that statement

So, depending upon whether or not we want to do more paperwork, we can issue a 1099 - or not. The choice seems to be up to us each individually.

Re: Hawaii Trying to Kill VRBO

community-no-reply@homeaway.com — Thu, 07 Feb 2013 23:39:37 GMT

I'll have to go with the accountant's reply on this one.

That is the same take I got when I took the training for and getting my Tax Preparer's License. The part of it where you would have to give virtually everyone and their brother that you paid any money to was repealed. The part where if you pay an individual (read independant contractor) more than $600 to do some work for you (ie your Cleaning Crew)(unless they are a Corporation) you need to provide them with a 1099.

It could be worse. A household employee that you pay over $1800 in a year gets a W-2 and you owe the Employer's share of the SS and Medicare taxes (not to mention needing to withhold and send in the employees share).

I purchase Turbo-Tax Home & Biz. It will not only handle the 1099s and W-2's if you need to do one but also keep track from year to year the depreciation on your Rental and save you a fortune over having some service do it for you. And you don't need to be a Tax Preparer to make it work. Of course it doesn't do a really good job of explaining why you need to list the land value (no depreciation on Land) when you list the cost of your property.

BHA

Re: Hawaii Trying to Kill VRBO

community-no-reply@homeaway.com — Thu, 07 Feb 2013 21:37:22 GMT

I don't think the repeal had anything to do with the Affordabe Care Act. Here is an article about it that I found when this ssue came up last year: http://taxes.about.com/b/2011/04/10/expanded-1099-misc-reporting-repealed.htm

Re: Hawaii Trying to Kill VRBO

community-no-reply@homeaway.com — Thu, 07 Feb 2013 21:12:24 GMT

There is really a good deal of confusion even within the accounting community. Here is an interpetation from another accountant:

"Rental of real property is more likely considered an investment activity rather than a trade or business. That being the case, I believe the landlord would NOT be required to issue Forms 1099-Misc to the attorney in your example or to other providers of services such as maintenance"

We should thank our government and the IRS for such clear regulations

Here is another opinion that 1099s are NOT required: http://speakingofrealestate.blogs.realtor.org/2011/04/08/600-1099-landlord-reporting-law-repealed/

Re: Hawaii Trying to Kill VRBO

community-no-reply@homeaway.com — Thu, 07 Feb 2013 20:47:49 GMT

jwe wrote:

For clarification,

According to 2011 1099 instructions you do not have to issue 1099s for rental property expense

http://www.irs.gov/uac/Update-to-the-2011-General-Instructions-for-Certain-Information-Returns-(Forms-1097,-1098,-1099,-3921,-3922,-5498,-and-W-2G)----27-May-2011

I told my accountant, he replied (in a very in-depth reply which I hopefully won't be billed for) basically that this repeal has to with Obamacare, and neither the original part of the Health Care law dealing with landlords nor this repeal has anything to do with our situation. The Health Care bill required 1099's to anybody for any expense, and that was repealed. Housekeepers were and still are non-employee compensation... 1099's still required.

Re: Hawaii Trying to Kill VRBO

community-no-reply@homeaway.com — Thu, 07 Feb 2013 01:51:56 GMT

For clarification,

According to 2011 1099 instructions you do not have to issue 1099s for rental property expense

http://www.irs.gov/uac/Update-to-the-2011-General-Instructions-for-Certain-Information-Returns-(Forms-1097,-1098,-1099,-3921,-3922,-5498,-and-W-2G)----27-May-2011

Re: Hawaii Trying to Kill VRBO

community-no-reply@homeaway.com — Wed, 06 Feb 2013 23:17:44 GMT

As I stated earlier, my housekepper only provides this service for me so I don't think licensing is an issue, regardless of what she does. What concerns me a little is if she seeks to take on more properties (no indication that she is contemplating this), what are the limits.Does anyone have a definition of what is considered "managing"?I do all of the rental and financial side of my operation. Does that alone make what others (housekeeper) do considered not to be managing? I won't knowingly not adhere to the laws of Hawaii, I just don't want to break them and not know I am breaking them.......Totally different subject, how do I break what I write into paragraphs? I hit enter or tab and it doesn't drop me down a line.

Re: Hawaii Trying to Kill VRBO

community-no-reply@homeaway.com — Thu, 07 Feb 2013 00:30:37 GMT

jwe-Sugar Beach, in Kihei.

Really happy with it. We stayed there on and off for the last dozen or so years. Hoping to retire someday on Maui.

Thanks for the how to on breaking it into paragraphs. Now to work on my typing and spelling.