As an individual (not a business), I paid an independent contractor a substantial amount of money for repairs and remodeling on a non-primary residence property that I will likely either rent or try to sell for profit. Can/should I request a W-9 and send him a 1099-NEC? Can I deduct the costs so I don't have to pay capital gains on the portion I paid him if I sell? I want to make sure this is all reported to the IRS correctly, and that I don't end up taking on his tax liability.
USA Tax documents for contract work
- Thread starter mrb
- Start date
Hi Mr. B,
Yes, you are correct, consequently I would do the following things.
1. Request a W-9 from your Independent Contractor.
2. Upon completion of the work, request that the contractor provide a satisfactory invoice that details the work performed and the amount.
3. Prepare a 1099 - MISC for the Contractor and provide the same.
For Tax purposes, two scenarios can play out.
1. Rental - The value of the cost to repairs is added to the existing basis and depreciation offset rental income.
2. Sales - Existing basis+ repairs = current basis. Therefore, upon sale it would the (Sales - current basis - 250K single or $500K marriage) The residual value is tax at capital gains rate (15-20%).
Yes, you are correct, consequently I would do the following things.
1. Request a W-9 from your Independent Contractor.
2. Upon completion of the work, request that the contractor provide a satisfactory invoice that details the work performed and the amount.
3. Prepare a 1099 - MISC for the Contractor and provide the same.
For Tax purposes, two scenarios can play out.
1. Rental - The value of the cost to repairs is added to the existing basis and depreciation offset rental income.
2. Sales - Existing basis+ repairs = current basis. Therefore, upon sale it would the (Sales - current basis - 250K single or $500K marriage) The residual value is tax at capital gains rate (15-20%).