The buyers of our home breached their contract and forfeited their deposit to us. Is that taxable, since we lost more then the deposit on the subsequent sale of the home?
Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
cancel
Showing results for 
Search instead for 
Did you mean: 
steve27
New Member

The buyers of our home breached their contract and forfeited their deposit to us. Is that taxable, since we lost more then the deposit on the subsequent sale of the home?

 
1 Reply
DDollar
New Member

The buyers of our home breached their contract and forfeited their deposit to us. Is that taxable, since we lost more then the deposit on the subsequent sale of the home?

The forfeiture of the deposit that you retained is ordinary income.  It would be reported on line 21 of Form 1040, as it is not subject to social security and medicare tax.  To enter in TurboTax:

  • In the Income section scroll down to the last section titled Less Common Income and click Show More
  • Select Start or Update next to the last topic titled Miscellaneous Income,  1099-A, 1099-C
  • Scroll down to the last option titled Other reportable income and select start or edit
  • When it asks "Any other reportable income? say Yes then type in a description and the amount to report it on your tax return.

This will place it on line 21 of your Form 1040.

Dynamic AdsDynamic Ads
v
Privacy Settings