When Do I Need to Issue 1099s for Property Management, Contractor Work, and Vehicle Damage Repairs?

These are great questions about 1099 requirements! Let me break it down by scenario: For your property management situation: Yes, you should issue your client a 1099-NEC if you paid them $600+ in a calendar year. Since Vrbo is reporting the full amount as your income, you need to document that you passed a portion to the property owner. For the door replacement: This gets tricky. Since you essentially acted as a pass-through and were reimbursed, this isn't technically income to you. Your client would not need to issue you a 1099 for reimbursement. However, if you paid the contractor $600+ for services, you should issue them a 1099-NEC. For the Turo damage: No 1099 needed for the body shop. Payments for merchandise, inventory, and physical goods (including repairs) generally don't require 1099s - only payments for services. The repair shop would provide you with an invoice documenting the transaction. The general rule is you issue 1099-NECs to individuals/unincorporated businesses when you pay $600+ for services in your trade or business. Payments to corporations are usually exempt.

I was in a similar spot with my property management business last year and found taxr.ai super helpful for figuring out these 1099 issues. I was confused about when to issue them and if I was responsible for reporting payments I was just passing through to property owners. The site https://taxr.ai helped me understand my obligations as a property manager. Their AI analyzed my specific business setup and explained exactly when I needed to issue 1099s and when I didn't. They also have tax pros who reviewed my situation and confirmed everything. It helped me avoid this exact problem with VRBO payments and contractor relationships.

Just wanted to update after trying taxr.ai for my rental property business. I was initially skeptical but decided to give it a shot for my 1099 questions. I described my payment setup with my vacation rental cleaners and maintenance people, and it immediately identified which ones needed 1099s and which didn't. The best part was when it explained how to handle the situation where I collect money from booking platforms and then distribute to property owners. They confirmed I needed to issue 1099s to the owners and explained exactly how to report everything on my Schedule C. Saved me from making some mistakes that could have triggered an audit. Much better than the generic advice I was getting elsewhere!

If you're having trouble getting clear answers about your 1099 obligations, you might want to talk directly with the IRS. That's what I did last year with a similar situation. I was on hold FOREVER trying to reach the IRS, then discovered https://claimyr.com which got me through to an actual IRS agent in about 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c I needed to clarify some 1099 requirements for my small business where I was acting as an intermediary collecting payments, similar to your Vrbo situation. The IRS agent walked me through exactly what forms I needed to file and helped me understand my obligations. Saved me hours of research and worry about doing things wrong.

I need to eat my words about Claimyr. I was completely skeptical (see my comment above), but I was desperate to talk to someone at the IRS about my 1099 situation with my consulting business. I figured I'd try it since I could always dispute the charge if it was bogus. To my surprise, I got a call back in about 35 minutes saying they had an IRS agent on the line! I was connected immediately and got all my questions answered about when I needed to issue 1099s to subcontractors. The agent even helped me understand how to handle some international contractors I work with. The time I saved not sitting on hold for hours was absolutely worth it. I've been telling everyone in my coworking space about it since.

Just a quick note from someone who learned this the hard way - make sure you're collecting W-9 forms from anyone you might need to issue a 1099 to BEFORE you pay them. I had a nightmare situation last tax season where I needed to issue 1099s but didn't have TINs for everyone. For your property owner and contractor situations, get those W-9s now so you have their info when tax time comes. You don't want to be chasing people down in January!

For the Turo situation, I think you might be missing potential deductions. If you received $13,500 for damages and paid $13,500 for repairs, you should record both transactions. Report the $13,500 damage payment as income (Turo will likely issue a 1099-K), and then deduct the $13,500 repair cost as a business expense. Even though it's a wash income-wise, documenting both sides properly will keep your books clean and defendable if you're ever audited. Ask your repair shop for an itemized receipt for your records.

Great questions! As a fellow small business owner who's dealt with similar situations, here are some key points to consider: For Situation 1 (Vrbo property management): You're correct to be thinking about 1099s. Since you're receiving the full amount from Vrbo and then paying your client their portion, you should issue them a 1099-NEC if you paid them $600+ during the tax year. This creates the proper paper trail - you'll report the full Vrbo income, deduct what you paid to the property owner as a business expense, and your client reports their portion as income. For Situation 2 (door replacement): Since you paid the contractor directly for services and it was over $600, you should issue them a 1099-NEC. The reimbursement from your client doesn't change your obligation to report what you paid the contractor. Your client reimbursing you isn't taxable income to you since it's just reimbursement. For Situation 3 (Turo damage): This one's tricky and depends on how Turo classifies the payment. If they treat it as insurance proceeds for property damage, it might not be taxable income. But if they issue you a 1099-K, you'll need to report it and offset it with the repair expenses. Either way, no 1099 needed for the body shop since repair services to your business property generally don't require 1099 reporting. I'd recommend consulting a tax professional for the Turo situation specifically, as the tax treatment can vary based on the exact nature of their damage coverage program.