Ever heard of Form D-30? What 1099 Contractors and Rental Owners Need to Know About Filing Taxes in the District of Columbia.

Most contractors and landlords file their taxes online and stop thinking about the IRS or D.C. until the next year. However, what every contractor, landlord, and solo-preneur may not know is that there is a separate filing requirement for unincorporated businesses in D.C.: the D.C. Form D-30. 

If you operate an unincorporated business or are a 1099 contractor working in the District of Columbia (DC), you must physically mail this form separately from your personal tax return! Online tax software won’t flag this form as necessary, and you may be out of compliance for years before getting a letter from D.C.

Unincorporated businesses and contractors in DC are considered self-employed individuals for tax purposes. If you fall under these categories, this means that you are responsible for reporting your income and expenses on your personal income tax return using the D-30 form. Contractors that make more than $12,000 a year must report using this method. The D-30 is used to report income from business activities, including income reported on various 1099 forms (NEC, Misc, etc.). You must also report any deductions or credits related to your business activities, such as expenses for supplies, travel, and equipment.

To illustrate this, let's look at an example:

John works at a landscaping business in DC as an unincorporated contractor. During the tax year, he earned $100,000 from his business activities, all of which was reported on Form 1099-NEC. John is required to file a DC personal income tax return using the D-30 form and report his $100,000 in business income.

If John fails to file his D-30 form or report his business income, he may be subject to penalties and interest on the unpaid tax. For example, if John owed $7,500 in DC business income tax but failed to pay it, he could be subject to a penalty of up to 25% of the unpaid tax, plus interest on the unpaid balance.

Consequences of Non-Compliance:

Failing to comply with DC tax reporting requirements can result in serious consequences, including penalties and interest on unpaid taxes. The DC Office of Tax and Revenue may also take legal action against non-compliant taxpayers, which can result in wage garnishment, property liens, and other collection actions. Depending on the situation, you may need to file other tax forms, such as the D-40 form to report personal income, the D-41 form to report rental income, and the FR-800A form to report sales and use tax.

It always pays to be aware of all the potential tax liabilities that loom on the horizon. By staying compliant with DC tax laws, you can avoid penalties and interest on unpaid taxes and protect yourself from legal action. If you have any questions or concerns about DC tax reporting requirements, it's best to consult with a qualified tax professional. At Safeguard Law, PLLC, our team of experienced tax attorneys specializes in helping our clients navigate issues such as this. Contact us today to schedule a consultation! Our main business line is (202) 505-1741‬.