SeattleRentals.com’s landlord blog had a very interesting post today related to reporting delinquent tenants to the IRS. If you have had a tenant refuse to pay rent within the past year, this is the time to do something about it!
The IRS has a form called the 1099-C – a miscellaneous income statement also known as a “Cancellation of Debt.” If you fill out this form with the tenant’s information, you are declaring that they received an additional source of income by not paying YOU rent. When the form is submitted, it will most likely trigger an automatic audit because they will not have declared the income in their return… what goes around, comes around! If you have any further questions contact your tax consultant or the IRS at 1-800-263-9700.