Posted by consigliere on December 16, 2001 at 15:31:18:
In Reply to: W9's for lease security deposit accounts posted by daniel on December 15, 2001 at 15:56:41:
Financial institutions don't have to send a 1099 form to the account holder or report to the IRS if an account earns less than $10 interest in a calendar year.
If there were individual security deposit accounts for each tenant, there would probably be few 1099s sent out, because most banks pay about 1% interest on security deposit accounts, and only security deposits over $1,000 would have reportable interest.
There are some other factors to be considered. There is probably only one security account for all the tenants in a building, so all the interest is reported to the IRS. But, each year, the landlord is entitled to keep 1% of the amount of the security deposit as an administrative fee, leaving the tenants with litlle or no interest.
I would ignore the landlord's request. But if the landlord presses the issue, I would demand a 1098 form from the landlord, for the interest that you are paying to the landlord in the way of that 1% annual administrative fee. Home, condo, and co-op owners get 1098s from the financial institution to which they pay their mortgage, for the interest that they pay on the mortgage. While a 1098 form might not be technically required for the 1% annual administrative fee, a request for 1098s by the tenants should get the landlord to back off.
: Our new landlord sent out W9's to tenants in order to open segregated lease security deposit accounts. Is this a common practice?
: We're reluctant to fill out the W9's because we have to give the landlord our social security numbers. We realize the bank needs the numbers to report the interest income, but can't that be done between us and the bank?
: Replies appreciated.
: (The apartments involved are all under rent stabilization.)
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