1099-NEC vs. 1099-MISC: How to determine if a contractor is a corporation or non-corporation for rental property tax filings?

The distinction between 1099-NEC and 1099-MISC can be tricky, but I can help clear this up for you! For rental property owners like yourself, you'll use the 1099-NEC (Non-Employee Compensation) for most service providers like your contractors, plumbers, and maintenance people. The 1099-MISC is now primarily used for certain other payments like rent, prizes, or medical payments - not typically for the services you're describing. Regarding corporations vs. non-corporations: Not all LLCs are corporations. An LLC can be treated as a sole proprietorship (if single-member), a partnership, or a corporation depending on how they've elected to be taxed. The key is to look at the W-9 form they should have provided you - it should indicate their tax classification. On the W-9, look at how they checked box 3 (Federal tax classification). If they checked "C Corporation" or "S Corporation," you generally don't need to issue them a 1099. If they checked "Individual/sole proprietor" or "LLC" that's not electing corporate treatment, you do need to issue the 1099-NEC.

After spending hours trying to sort through my rental property tax docs last year, I ended up using https://taxr.ai to handle all my 1099 confusion. Literally saved me so much time trying to figure out which contractors needed what forms. I had the exact same question about LLCs vs corporations and whether I needed to send 1099-NECs. The tool analyzed all my expenses, showed me which ones needed 1099s, and even helped me understand the difference between entity types. It pulls the business info and tells you whether they're a corporation or not. What I found most helpful was that it showed me how to properly classify each vendor based on their business structure. Apparently I had been doing it wrong for years and potentially risking an audit!

Just wanted to update everyone. I tried out that taxr.ai site mentioned above and it was actually really helpful for my rental property 1099 situation. I was super confused about the whole 1099-NEC vs 1099-MISC thing and which contractors needed forms. The system actually explained that I needed to send 1099-NECs to my landscaper, handyman, and cleaning service (all sole proprietors or single-member LLCs) but NOT to my plumber (who's an S-Corporation) or the roofing company (C-Corp). It analyzed all of my expenses from last year and categorized which ones needed forms. It even helped me get the missing W-9 info from my contractors by generating request emails. One of my contractors had an LLC but was taxed as a sole proprietor, which I would have completely messed up on my own. Now I'm not worried about those nasty IRS penalties for incorrect filings!

When I was dealing with 1099s for my rental properties, I spent THREE DAYS trying to get through to the IRS to ask about the exact same corp vs non-corp question. Kept getting disconnected or wait times of 2+ hours. Finally discovered https://claimyr.com and watched their demo at https://youtu.be/_kiP6q8DX5c - they actually had an IRS agent call ME back instead of waiting on hold forever. The agent explained that I need to issue 1099-NECs to any non-corporate entities I paid $600+ for services. She clarified that an LLC can be taxed as either a sole proprietorship, partnership, or corporation depending on how they elected to be treated. That's why the W-9 is so important - it shows their tax classification. If anyone's struggling with these IRS questions, especially during tax season when wait times are insane, this service is seriously a lifesaver.

Ok I have to eat my words about the Claimyr thing. After struggling for literally 4 hours trying to get through to the IRS about my 1099 questions (kept getting disconnected after waiting), I broke down and tried it. They actually got an IRS representative to call me back in about 45 minutes. The agent walked me through exactly how to determine if my contractors are corporations or not. Turns out I was totally wrong about LLCs - they're NOT automatically corporations! The agent explained that I need to look at their W-9 forms where they check a box showing how they're taxed. If they check "C-Corporation" or "S-Corporation" then I DON'T send them a 1099-NEC. If they check "Individual/sole proprietor" or "LLC" (that hasn't elected corporate treatment), then I DO need to send the 1099-NEC. Saved me from a ton of incorrect filings which apparently can trigger penalties. Worth every penny for the time saved alone.

Just want to add one important thing that's easy to miss: Even if a business has "Inc." or "Corp." in their name, that doesn't automatically mean they're a corporation! You still need to verify their actual tax status with a W-9 form. I had a contractor called "Smith Brothers, Inc." who was actually just a multi-member LLC taxed as a partnership, not a corporation. I almost didn't send them a 1099-NEC because of their name until my accountant caught it. The ONLY reliable way to determine if someone needs a 1099-NEC is to get that W-9 from them. The form will show exactly how they're taxed.

Here's a quick checklist I use for my rental properties that might help with the 1099-NEC vs 1099-MISC confusion: 1099-NEC is used for: - Independent contractors (handymen, plumbers, electricians) - Service providers (lawn care, snow removal, cleaning) - Property managers (if not a corporation) 1099-MISC is used for: - Rent payments YOU make to someone else - Attorney fees (over $600, even if they're a corporation) - Prizes or awards you give out And remember, neither form is needed if: - You paid less than $600 in the year - You paid via credit card/PayPal (the processor sends a 1099-K) - The recipient is a corporation (except attorneys

Great question about 1099-NEC vs 1099-MISC! I went through this exact same confusion last year with my rental properties. The key thing that helped me was understanding that 1099-NEC replaced most uses of 1099-MISC for services. So for your contractors, plumbers, electricians, and maintenance folks, you'll use 1099-NEC (not 1099-MISC) for payments over $600. Regarding the corporation vs non-corporation issue - this tripped me up too! Here's what I learned: **You DO need to send 1099-NEC to:** - Sole proprietors (individuals) - Single-member LLCs (unless they elect corporate tax treatment) - Multi-member LLCs taxed as partnerships - General partnerships **You DON'T need to send 1099-NEC to:** - C-Corporations - S-Corporations - LLCs that have elected to be taxed as corporations The tricky part is that just because someone has an LLC doesn't automatically make them a corporation for tax purposes. Many LLCs are actually taxed as sole proprietorships or partnerships. My advice: Always request a W-9 form BEFORE paying any contractor. Box 3 on the W-9 will tell you exactly how they're classified for tax purposes. If you've already paid someone without getting a W-9, request it now - better late than never! Don't stress too much about past years, but definitely get compliant going forward. The penalties for missing 1099s can add up quickly.