Form 1099-MISC and Schedule E Instructions Are Wrong! | Tax Tip of the Week | No. 122

Don’t Read the Instructions!Several months ago (see TTW #90) we told you that the requirement for all businesses to issue a 1099-MISC to any entity to whom they paid in excess of $600 was repealed. (Remember, this was the rule that would have required a small business owner to issue a 1099-MISC to Best Buy if they bought a computer from them).  This reporting requirement also applied to those that had rental properties.However, when you read the instructions for preparing a 2011 Form 1099-MISC and Schedule E (the form used to report rental income) the reporting requirement for rental property owners is still included!At the time of this writing it does not appear the IRS is going to update their instructions.  This could lead to a lot of confusion and extra work for those uninformed.The old rules for issuing a 1099-MISC have remained unchanged.  See TTW #77 for a refresher on when to issue a 1099-MISC.While it is a good idea to start with the instructions when assembling your kids new bike—don’t believe everything you read.  (Hopefully an update will occur shortly).Let us know if you have any questions.You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.Rick Prewitt - the guy behind TTWVideo Tax Tip of the Week:http://www.youtube.com/watch?v=AJdQ8oM7WFY...until next week.