I have contributions towards closing cost on investment property. My real estate agent issued 1099-nec for the amount. I use Turbo Tax Home and Business. I am unable to enter 1099-NEC under business which is actual reason for this payment but have to report under my personal Income. How to handle this?
The following statement is confusing.
I am unable to enter 1099-NEC under business which is actual reason for this payment but have to report under my personal Income.
How is this payment for "business"? Are you in some kind of business that buys/sells property? I don't understand how this is "business which is the actual reason for this payment". I see it as a rebate or refund of some of the RE agent's commission. If so, 1099-NEC was probably the wrong form to use.
Normally the agent would just reduce their fee and not give you a "kick back" of their commission (which is illegal if you are not also a liscense RE agent) even it it was used against closing costs. I understand what you were trying to accomplish however it was not "kosher" and the broker they work for should have not allowed it.
Now you are stuck with a 1099 that should not have been issued. That amount should reduce your basis in the home and not be considered earned income. What you should do is get the RE agent to take back the 1099-NEC if they will. On their return they can negate the income by calling what they "paid you" another way ... as a sub contractor is not correct.
I used the word "Business" since TurboTax Home and Business lists Rental properties under Business and calculates QBI - I am not in Real Estate Business.
In the past when i worked with different real estate agent - i was given a gift letter for the contribution towards closing cost. However now (different agent) gave me 1099-NEC , that makes it as self employed income and not towards cost of closing. How do i handle this?
On their return they can negate the income by calling what they "paid you" another way ... as a sub contractor is not correct.
Exactly - Gift towards closing becomes self employment income since 1099-NEC is issued. I can go back to the agent and ask - is there any other option available to handle this situation?