IRS keeping an eagle eye on payments to independent contractors | Cross River NY Real Estate

If, like most real estate pros, you’re a sole proprietor, you must file Schedule C with your return to report your business income and expenses, and show whether you have a net profit or loss for the year.

Two new lines have been added to the beginning of Schedule C, labeled “I” and “J.” Line I asks whether you made any payments during the year that required you to file IRS Forms 1099. If you answer yes, you have to answer in Line J whether you have already filed, “or will you file,” the forms.

Similar questions have been added to IRS Form 1065, U.S. Return of Partnership Income; Form 1120, U.S. Corporation Income Tax Return; and Form 1120S, U.S. Income Tax Return for an S Corporation. The same question was added to Schedule E for IRS Form 1040 in 2011.

These new questions are an attempt by the IRS to persuade businesses to file all required 1099s, particularly Form 1099-MISC, the form used to report payments to independent contractors. This is part of the IRS’s ongoing effort to prevent businesses from failing to report all their income.

Leave a Reply

Your email address will not be published. Required fields are marked *