I have received a 1099-nec for a one time payment on relocating of my family from a house we where renting. Can this be considered a sporadic activity or how should I go about it because I do need to apply deductions for the expenses of the move?
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Unless you're an active duty military member, moving expenses for employees are no longer deductible (the deduction was eliminated for the 2018-2025 tax years by the TCJA).
Reimbursement for moving expenses is taxable income. However, if you are a W-2 employee, the stipend should have been included in your W-2 taxable wages, and be subject to income tax, social security tax, and medicare tax withholding. By putting it on a separate 1099-NEC, the employer is, intentionally or accidentally, making you pay both halves of social security and medicare (via 15% self-employment tax) instead of withholding 7.65% social security and medicare and paying the other 7.65% themselves.
You should first contact them and ask them to cancel the 1099-NEC and issue a corrected W-2. If they refuse, when you enter the 1099-NEC, there is a list of special circumstances and one of those is "this was paid to me by my employer and should have been included on my W-2." Turbotax will prepare a form 8919 with code H, and will add 7.65% social security and medicare tax to your return, instead of 15% self-employment tax.
You should not have a schedule C for self-employment and you can't deduct moving expenses against the income. You can still list moving expenses in Turbotax because they may be deductible in some states depending on your other tax information, but they are not deductible on your federal return.
Who paid you for relocating and sent you the 1099-NEC? Was it your employer or someone else? Why did they pay you to relocate?
Did the landlord pay you because they wanted you to move out of the house that you were renting?
@rjs wrote:
Did the landlord pay you because they wanted you to move out of the house that you were renting?
Shoot, I missed that. If this was a landlord, who paid you to move out so they could sell or rent to someone else, then I would say
a. the payment is non-taxable as long as it is less than your rent payments for the year (a rent discount is not taxable income).
b. the payment is partially taxable if it is more than your rent. But it is not self-employment income, because it is not compensation for work performed for the landlord.
Thank you all!
just to clarify compensation came from investor company my landlord was selling home to.
Because of years I had been a tenant I had to be compensated to leave So that company mailed me a 1099-NEC after payment, they explained because it was more than $600. My issue with all of this is that I'm being taxed for money that I needed to relocate, and it was used for that but because of the 1099 its like it was income I earned.
I was just on hold with IRS for about 3 hours and was told same thing.
Sadly, I will not be able to make deductions for this even if it all went toward the relocation.
@ginxxie717 wrote:
Thank you all!
just to clarify compensation came from investor company my landlord was selling home to.
Because of years I had been a tenant I had to be compensated to leave So that company mailed me a 1099-NEC after payment, they explained because it was more than $600. My issue with all of this is that I'm being taxed for money that I needed to relocate, and it was used for that but because of the 1099 its like it was income I earned.
I was just on hold with IRS for about 3 hours and was told same thing.
Sadly, I will not be able to make deductions for this even if it all went toward the relocation.
Again, to the extent this is a rent rebate or rent discount, it is not taxable at all, in my opinion. There is a method to account for this in Turbotax. Just because the payer issues a 1099 does not necessarily make the money taxable income, if you can prove otherwise.
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