Deduct Everything – Tracy Byrnes

Issue Form 1099-MISC for Service Providers (IRC § 6041) If you hire anyone who isn’t a corporation—like a handyman, cleaner, or landscaper—and you pay them $600 or more during the year, the IRS expects you to send them a Form 1099-MISC. Section 6041 requires it, and skipping this step can trigger penalties or jeopardize your deductions.

The good news? It’s easy to stay compliant. Before you pay anyone, have them fill out Form W-9 to collect their Tax ID number. Then file the 1099 by the January deadline. Doing it right lets the IRS know that you are running your rental like a real business. A quick bit of paperwork now saves big headaches later.

But—You Can Avoid Issuing 1099-MISC with Credit Card Payments Want to cut down on the above tax paperwork? Pay your contractors with a credit card or qualifying online payment processor instead of a paper check. Under Section 6050W, the IRS shifts the reporting burden to the payment processor. So the processor will issue a Form 1099-K to your contractor, and then you don’t have to send a Form Platforms that qualify include major credit cards (Visa, Mastercard, Amex, Discover) and third-party processors, such as PayPal Goods & Services, Stripe, Square, and Shopify Payments.

Big note: Always choose the business-class option (“Goods & Services”) when paying through a platform. It may cost a small processing fee, but it keeps your records clean and compliant and saves you from having to issue 1099-MISC forms later. Platforms that generally do NOT qualify: Peer-to-peer apps used for personal transfers, such as Venmo (friends and family) or Cash App (personal). Big note, Zelle does not issue 1099-Ks because it is a direct bank-to-bank transfer.

If you pay a contractor via Zelle, you are still responsible for issuing the 1099-NEC. Just make sure your transactions are clearly marked as business payments (for example, “PayPal Goods & Services,” not “Friends & Family”). As always—keep good records. Now a Few Good Deductions Folks with Rental Properties Often Forget Deduct Interest on Time-Shares (IRC § 163) If you own a time-share and use it as a personal vacation spot, you may still be able to deduct the mortgage interest.

Section 163(h) allows the deduction as long as it qualifies as a “second home.” The big rule is that you must personally use it for more than 14 days or 10% of the total rental days per year. That keeps it in “personal residence” status for tax purposes. While time-shares can be tricky, this deduction can help offset part of your ownership costs.

Just be sure you don’t double-dip by claiming it as both a personal and rental property.

No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any other information storage and retrieval system, without written permission from the publisher. Humanix Books is a division of Humanix Publishing, LLC. Its trademark, consisting of the word “Humanix,” is registered in the Patent and Trademark Office and in other countries.

Disclaimer: The information presented in this book is meant to be used for general resource purposes only; it is not intended as specific financial advice for any individual and should not substitute for financial advice from a finance professional. Portions of this book originally appeared in Deduct Everything by Eva Rosenberg (978-1-63006047- 3), and The Trump Tax Cut by Eva Rosenberg (978-1-63006105-0).

Humanix Books titles may be purchased for educational, business, or sales promotional use. For information about special discounts for bulk purchases, please contact the Special Markets Department at [email protected]. Cover design: Ben Davis ISBN: 978-163006-349-8 (Paperback) ISBN: 978-163006-350-4 (E-book) Printed in the United States of America 10 9 8 7 6 5 4 3 2 1 OceanofPDF.com For David, Julia, and Celia, Because even the most complicated things become manageable when met with confidence, curiosity, and a sense of humor. I love you most.

This is a short excerpt from the opening of “” by Unknown, quoted for review and introduction purposes. All rights belong to the copyright holders.

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