1099 NEC Earnings Rule

[sfhus]

Commissions reported on 1099 NEC - is this true???

When a REALTOR® works as an independent contractor rather than an employee of a brokerage company, the brokerage companies may issue an annual Form 1099 to the REALTOR to report amounts paid to the broker. When the REALTOR® agrees to return part of a commission to the buyer or the seller, and this has been structured as a reduced commission or as a credit on the closing statement, the 1099 issued by the brokerage company should reflect only the net amounts paid to the REALTOR® and this amount will be reported as gross income. If however, the REALTOR® received the gross commission and actually returned some to the seller or buyer, the gross amount is reported and the REALTOR® should be entitled to a corresponding deduction.  Can you advise as my Broker is adding commissions not earned and detailed as buyers/sellers credit on the settlement statement.

[sfhus]

When a REALTOR® works as an independent contractor rather than an employee of a brokerage company, the brokerage companies may issue an annual Form 1099 to the REALTOR to report amounts paid to the broker. When the REALTOR® agrees to return part of a commission to the buyer or the seller, and this has been structured as a reduced commission or as a credit on the closing statement, the 1099 issued by the brokerage company should reflect only the net amounts paid to the REALTOR® and this amount will be reported as gross income. If however, the REALTOR® received the gross commission and actually returned some to the seller or buyer, the gross amount is reported and the REALTOR® should be entitled to a corresponding deduction.  Can you advise as my Broker is adding commissions not earned and detailed as buyers/sellers credit on the settlement statement.

[AmyC]

You can report the entire income and then write off those commissions that you did not actually receive. As long as your bottom line number on your taxes is correct, it does not matter where the money is deducted. You have a statement showing the deduction is legitimate.

The 1099-NEC is for each person to whom the taxpayer has paid at least $600 during the course of a business for the following.

•Services performed by someone who is not an employee, including parts and materials (box 1),

•Cash payments for fish (or other aquatic life) purchased from anyone engaged in the trade or business of catching fish (box 1), or

•Payments to an attorney for legal services (box 1).

The Form 1099-MISC is for each person to whom the taxpayer has paid the following during the course of a trade or business.

•At least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest,

•At least $600 in rents (box 1), prizes and awards (box 3), other income payments (box 3), the cash paid from a notional principal contract to an individual, partnership, or estate (box 3), any fishing boat proceeds (box 5), medical and health care payments (box 6), crop insurance proceeds (box 9), payments to an attorney (box 10), IRC section 409A deferrals (box 12), or nonqualified deferred compensation (box 14).

•Any payment from which federal income tax has been withheld (box 4) under the backup withholding rules