Hello TS2014! Thanks for participating in our event today. Congratulations on your home purchase! This is an excellent question that applies to many people. Generally only down payment assistance provided by a non-profit organization is tax free. Typically down payment grants provided by a bank will be considered taxable income. They may not make this clear, as it is often buried in the small print somewhere. You can check with Truist bank to confirm this is taxable. In that case, you will receive a 1099-misc from the bank, and a copy will go the IRS also. This means you must report this income on your tax return. This is easy to do in Turbotax.
Enter the information as follows in the 1099-MISC interview:
-Enter the 1099-Misc under Other Common Income from the Income and Deductions page
-For the description, enter "Down payment grant"
-Be sure to select that it does not involve work like your main job, and that it did not involve an intent to make money
-The income will be reported on schedule 1 and line 8 of your 1040. It will be taxed at your normal rate for ordinary income, which depends on your tax bracket.
