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Tax Law (Questions About Taxes)/1099 and taxpayer identification numbers

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Question
I recently took over my fiance's bookkeeping for his construction company.  He has NO taxpayer identification numbers for any of the fly by night guys that worked for him.  There are ten of them.  Many he paid over $600 to.  The expenses total about $6000 for them, to date.  They don't do work for us any more.  I need to 1099 them.  I have their names and addresses as well as phone numbers.  This is a framing company, and we place ads on craigslist for workers.  Many don't come back after 2 or three days of work.  We only have two regular subcontractors for whom we have social security numbers. Will the IRS disallow the expense for these guys?

Answer
Dear Kristina,

You were supposed to take tax ID numbers from the contractors before you hired them. Aside from the need to deduct those expenses, you were required to do so to prevent hiring illegal immigrants with no right to work in the U.S.

Now you have to send each of them the following document:

Annual Solicitations by Mail

1.    A letter stating that the payee must provide an accurate TIN.
2.    Form W-9,Request for Taxpayer Identiication Number
and
3.    A return envelope, which may be (but is not required to be) postage prepaid

For those who did not respond, you have two options: file form 1099 marked 'tin not available' and including a copy of the solicitation letter.

Otherwise, report their compensation without filing form 1099 for that person and keep solicitation letter and proof of payment made as a supporting documentation for the IRS.

Hope this helps,
I.J.Zemelman

Tax Law (Questions About Taxes)

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IJ Zemelman, EA MBA

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I am an IRS-authorized EA and principal of a Tax Preparation firm focusing on U.S. Expatriates. We specialize in all tax issues faced by American citizens living abroad - such as foreign earned income, tax treaties, foreign spouse, etc. Visit our website - www.TaxesForExpats.com - for more information.

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18 years professional tax experience, 12 with expatriate taxes.

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Expatriate tax information on www.TaxesForExpats.com

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MBA from Zicklin School Of Business, IRS Enrolled Agent

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