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rchead037
Level 2

Taxation of interest on CCRC entry-fee refund

My mother lived and passed away in a good CCRC. Her contract with them provided a 90% return of her entry fee once the unit she occupied was re-occupied. California, meanwhile, recently established a rule requiring interest payments on the CCRC entry fee if it was not paid back within a few months.

 

After my mother died, payment of the entry fee refund was delayed because of the pandemic; it took a long time before they could market and re-fill her unit. As a result, when I got her fee refund, there was a also a substantial interest payment, as well. I asked the CCRC's financial staff to provide me a 1099-I for this interest, but they said they had not been issuing 1099s on this interest.

 

I am assuming this interest should be taxable, since it doesn't fit into any exempt category. But I can't find any discussion of the issue online, anywhere: the interest earned on late refunds is not on anyone's radar.

 

I guess I can create a manual 1099-I in TurboTax for 2021,. The IRS does not mind us reporting more income than they know about instead of less, as far as I know 🙂

1 Best answer

Accepted Solutions
martinmarks
Level 10

Taxation of interest on CCRC entry-fee refund

Not necessary to create any form.....report the interest as interest in the TT program.

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1 Reply
martinmarks
Level 10

Taxation of interest on CCRC entry-fee refund

Not necessary to create any form.....report the interest as interest in the TT program.

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