For years, I've been an investor in a relative's real estate business, which is primarily flipping homes. The original agreement was a straight note where I am paid 10% annually per the principle amount invested, based on when homes are sold. For years, I received a 1099-INT which is taxable as normal income. I am typically in the 22% tax bracket.
For 2025, I received a 1099-NEC, which is new to me. The amount earned was close to $13k. After some reading, it appears that I pay self-employment tax, plus federal tax, plus state tax. My initial calculations are the 1099-NEC would be taxed upwards of 30-35%.
Questions for this forum - What tax credit might I have missed with 1099-NEC? Would it be better to request a 1099-INT from my relative's business?
