I’ve never gotten into number crunching. I hated math in high school, got through it, took as little as I could in college, got through it. I do a good job of keeping track of all my receipts, and my accounting for my business is impeccable. Beyond that, I have no interest.
I use Excel spreadsheets to keep track of all my income/expenses throughout the year, and I have to keep every receipt for each property and file taxes separately for each property. When I hand everything over to my excellent CPA at tax time, I always go with a list of questions and comments, and talk with her about goals and plans for the upcoming year. She gives me input about the tax implications of various directions I might take with my business, etc., and also informs me about upcoming changes in the tax laws/requirements for the next year.
At my tax meeting last month, I was really disgusted to find out that I’m going to be saddled with yet another accounting task for 2011. The Small Business Jobs Act (passed in September 2010) is changing the way we landlords provide records to the government. Starting on January 1, 2011, rental income is going to be subjected to the same tax reporting requirements as a business or trade, in that we are going to be required to record payments to individuals and give them all 1099s in January of 2012. Now, some landlords have done this sporadically in the past, but it wasn’t necessary . . . a rental property hadn’t been considered “a business” in the eyes of the government. Not until now.
So from here on out, if I pay (over the year) more than $600 to any of my providers ( plumber, electrician, carpet layer, heating/cooling guy, etc. etc.) I’ll need to give each of them, and the IRS, a 1099. Another thing to keep track of . . . . as if I don’t have enough already! I’ll have to obtain the name and address of each provider (easy enough) and also their taxpayer ID number (more of a hassle). Sigh . . .
I just read tonight that if a landlord doesn’t file the 1099s, he/she will most likely lose the deductions requested when the taxes are prepared and submitted. And the fines for failing to file these 1099s? They range from $60 to $250,000. So, I guess I’ll be sharpening that pencil and bugging my sub-c0ntractors for their info, and keeping another set of those meticulous records . . . sigh . . .
Thanks for letting me vent! Onward and upward. Or . . . sideways???