Your 1099-MISC from Zillow is not taxable. Tax Expert @PaulM found an IRS private letter ruling on this topic where the IRS said "a payment or credit at closing from Taxpayer represents an adjustment to the purchase price of the home and generally is not includible in a purchaser’s gross income."
You should report the 1099-MISC as income (to show the IRS you are reporting it) and then add a negative adjustment to zero it out.
Read the full discussion here: I received a 1099-MISC from my real estate agent for a commission rebate. Is this considered taxabl...
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