1099's for Deadbeats

Discussion in 'Business Operations' started by DFW Area Landscaper, Jan 20, 2004.

  1. DFW Area Landscaper

    DFW Area Landscaper LawnSite Silver Member
    from DFW, TX
    Posts: 2,116

    According to this article, we're supposed to send a 1099 to any deadbeat who causes us to write off a bad debt.


    ++++Forgive but collect is the IRS motto when it comes to forgiven debt.

    Did you lose control of your credit cards to the point that you simply were unable to pay the balance? What a relief it was when you discovered you could negotiate with your credit card company to get it to accept just half of what you owed.

    Getting your credit card bill cut from eight grand to $4,000 certainly helped your personal bottom line. It also could be a boon to the U.S. Treasury. Why? The tax law generally considers the amount you get Visa, MasterCard or any creditor to write off as earned, and therefore taxable, income to you. Expect the accommodating debt-holder to send you a Form 1099 detailing your discharge of indebtedness as miscellaneous income.++++

    Am I reading this right?

    DFW Area Landscaper
  2. Soupy

    Soupy LawnSite Gold Member
    Posts: 3,125

    It has been like this for years. I beleive the amount of debt has to be $600 or more. The was uncle sam looks at it is you were given that money back by the person you owe it to. So in a way you just earned $600. Lets say you install some landscape and the person screws you out of $1000. in all reality that person was given a $1000 of your money. Shouldn't he have to pay for it. That's $1000 less you claim as earned income.

    I'm not sure, but isn't uncle sam just getting the taxes from the person that didn't pay instead of the person that should have earned it.

  3. 65hoss

    65hoss LawnSite Fanatic
    Posts: 6,360

    How exactly to you intend to get their SSN? If they won't pay do you really think they will just tell you their social security number?
  4. joemartinez44

    joemartinez44 LawnSite Member
    from Dallas
    Posts: 2

    ++++How exactly to you intend to get their SSN? If they won't pay do you really think they will just tell you their social security number?++++

    That's exactly what I was thinking.

    But if I have to write off over $600 to bad debt, I'd guess you're supposed to do it. Can you file a 1099 without a social security number?
  5. 65hoss

    65hoss LawnSite Fanatic
    Posts: 6,360

    Nope, they have to match it up by ssn. There can be 1000's with the same name.
  6. Kelly's Landscaping

    Kelly's Landscaping LawnSite Platinum Member
    Posts: 4,353

    Perhaps though a credit report you do have the persons name and address you should be able to cross-reference it. I am enjoying this idea allot and I’m saddened I only have a guy at 385 dollars that I got beat out of so he is exempt from a 1099.
  7. the scaper

    the scaper LawnSite Senior Member
    Posts: 690

    your the first person i ever saw that was sad he only got beat out of $385 instead of $600+:D. i think what you're really sad about is that it's not $100+...me too!

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