1099 Security deposit refund

[sudha1966]

We paid rent to one of our employees for $2460.

The Lease got over and they returned a security deposit of $1017.

Do we need to report 1099 $2460 or $1017?

Thank you

[DaveF1006]

 To clarify, is the rent amount and security deposit part of the $2460 amount and did the employee issue you the 1099?

[sudha1966]

Yes. Both are from same vendors.

Employee leased from vendor and our organization paid for the office space to vendor directly.

[DaveF1006]

Looking at your original statement, I assumed the  vendor returned and issued you a 1099 for the amount of the security deposit. You would report this as income in your business tax return. In this case, it is $1017. If this is the case, did the vendor report the income as $1017 on the 1099?

If this is the case, you would report $2460 as an employee benefit expense as an expense in your business tax return. The overall effect is that the return of the security deposit will offset the amount of the rent paid leaving a difference of $1443. The Turbo Tax program will handle this.

Please let me know if I have these assumptions correct.

[Carl]

Typically, a rental security deposit is not reported as an expense by the payor, or as income by the recipient. The original payment of the deposit is not a reportable event. Likewise, the return of said deposit is also not a reportable event. The event only becomes reportable if the recipient retains all or any portion of said deposit at the end if the lease. Again, I stress this is "TYPICALLY" how it's done. Nothing says it has to be done that way.

Did you report the security deposit as an expense when you paid it? If so, then you also report it as income when it's returned to you.