turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
Announcements
Ask the Experts Retirement/Life Events! >> Event happening TOMORROW!!!
Close icon
Do you have a TurboTax Online account?

We'll help you get started or pick up where you left off.

My Real Estate Agent issued 1099-nec for the commission towards closing cost. Is this considered income?

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?

x
Do you have an Intuit account?

Do you have an Intuit account?

You'll need to sign in or create an account to connect with an expert.

1 Best answer

Accepted Solutions
JamesG1
Expert Alumni

My Real Estate Agent issued 1099-nec for the commission towards closing cost. Is this considered income?

Real estate commission rebates are not taxable income but reduce your home's basis.  

 

As an example, if you purchase the home for $200,000 and receive a $1,000 real estate commission rebate from your realtor, your cost basis in the  new home becomes $200,000 - $1,000 = $199,000.

 

The problem comes in reporting the 1099-MISC which has been issued to the IRS.  It would be preferable if the 1099-MISC would be withdrawn by the issuer.  

 

If the 1099-MISC is not withdrawn, follow the steps below to report the income and reverse the entry.

 

  • Select Federal from the left side menu.
  • Click on Wages & Income.
  • Scroll down to Less Common Income.  Click Show more.
  • Click Start / Revisit to the right of Miscellaneous income….
  • Click Start / Revisit to the right of Other reportable income.
  • At the screen Other Taxable Income enter a description such as 'Real estate commission rebate' and the dollar amount.
  • At the screen Other Miscellaneous Income Summary, select Add another miscellaneous income item.
  • At the screen Other Taxable Income enter a description such as 'Real estate commission correction' and a negative number.

The entry will be reported:

 

  • on line 8z of Schedule 1 of the Federal 1040 tax return, and 
  • on line 8 of the Federal 1040 tax return.

Make sure that you keep records of all transactions. Later, you may need to demonstrate to the IRS that this is not taxable income.

 

View the entries at Tax Tools / Print Center / Print, save or preview this year's return / Include government and TurboTax worksheets.

 

See this TurboTax Best Answer.

 

 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

2 Replies
JamesG1
Expert Alumni

My Real Estate Agent issued 1099-nec for the commission towards closing cost. Is this considered income?

Real estate commission rebates are not taxable income but reduce your home's basis.  

 

As an example, if you purchase the home for $200,000 and receive a $1,000 real estate commission rebate from your realtor, your cost basis in the  new home becomes $200,000 - $1,000 = $199,000.

 

The problem comes in reporting the 1099-MISC which has been issued to the IRS.  It would be preferable if the 1099-MISC would be withdrawn by the issuer.  

 

If the 1099-MISC is not withdrawn, follow the steps below to report the income and reverse the entry.

 

  • Select Federal from the left side menu.
  • Click on Wages & Income.
  • Scroll down to Less Common Income.  Click Show more.
  • Click Start / Revisit to the right of Miscellaneous income….
  • Click Start / Revisit to the right of Other reportable income.
  • At the screen Other Taxable Income enter a description such as 'Real estate commission rebate' and the dollar amount.
  • At the screen Other Miscellaneous Income Summary, select Add another miscellaneous income item.
  • At the screen Other Taxable Income enter a description such as 'Real estate commission correction' and a negative number.

The entry will be reported:

 

  • on line 8z of Schedule 1 of the Federal 1040 tax return, and 
  • on line 8 of the Federal 1040 tax return.

Make sure that you keep records of all transactions. Later, you may need to demonstrate to the IRS that this is not taxable income.

 

View the entries at Tax Tools / Print Center / Print, save or preview this year's return / Include government and TurboTax worksheets.

 

See this TurboTax Best Answer.

 

 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

My Real Estate Agent issued 1099-nec for the commission towards closing cost. Is this considered income?

Thank you for the assist with this.  

message box icon

Get more help

Ask questions and learn more about your taxes and finances.

Post your Question
Manage cookies