I made less than $250000 on the sale of my home and the page I'm on says it won't be entered and doesn't need to be unless I received a 1099-S. I did receive a1099-S.

[umatude08]

Does that mean I have to report it?

[DS30]

Yes. You will need to report the sale but you will not have any taxable capital gain if you meet the home gain exclusion.

Because you received a 1099-S for the sale of your primary residence, the IRS will also have received a copy of this 1099-S. Therefore, even though the sale will be exemption if eligible for the home gain exclusion, you will need to report this on your income tax return.

You can take the gain exclusion as long as you considered the home your "primary residence" for 2 of the last 5 years. If you have a capital gain from the sale of your main home, you may qualify to exclude up to $250,000 of that gain from your income. You may qualify to exclude up to $500,000 of that gain if you file a joint return with your spouse. See  Sale of Your Home for more information on the exclusion.

If you need to enter your sale of your primary residence because you received a 1099-S, please follow these steps:

1. Once you are in your tax return (for TurboTax Online sign-in, click Here), click on the “Federal Taxes” tab ("Personal" tab in TurboTax Home & Business)
2. Next click on “Wages & Income” ("Personal Income" in TurboTax Home & Business)
3. Next click on “I’ll choose what I work on”
4. Scroll down the screen until to come to the section “Less Common Income”
5. Choose “Sale of Home (gain or loss)” and select “start’
6. You will want to use the "Easy Guide" to determine the adjusted basis on this home 

Say "yes" that you sold your main home and TurboTax will guide you on entering this information.  You will need:

• The date you sold your home and the selling price (from your closing statement)
• The date you bought your home and the purchase price (from your closing statement)
• The cost of any major improvements you made, so we can deduct them for you
• Form 1099-C if you sold your home at a loss (short sale)

Just remember to check the box to have your home sale reported on your tax return but ONLY if you receive a 1099-S

[Nefrella]

So, am I understanding this correctly then:

House sale profits - $166k is exempt from Capital Gaines, but that income is STILL attached to me from the 1099-S.

Does that mean that when I file my taxes next year, that I will be responsible for the taxes on that additional money I received (even though I didn't pay capital gains?)

So, Annual income + 1099-S (from house sale) = Next years tax bill?

Thanks in advance, this is so stressful, appreciate any feedback!!

[Texas Roger]

You will enter the capital gain on your tax return and then exclude it from being taxable. Since it is excluded, it will not show up on your tax return as taxable income.  You will not pay any tax on the excluded amount.

[Nefrella]

Thank you. 

Maybe im thick headed, but that makes no sense.  How is there any money for free?  the IRS always wants their money, and if a 1099 is attached, doesnt that attach the proceeds to my normal annual income and then in turn make it taxable? (even if it is not at the capital gains rate?)

[Texas Roger]

The excludable gains are not taxable because that is the way congress wrote the tax law. They gave home owners who sell their homes a tax break on the amount of the capital gains that are excludable. The reason the 1099-S is issued is because the issuer does not know how much, if any, of the proceeds from the sale can be excluded from taxes. You enter the amount of the proceeds that represent a gain and apply the exclusion to the gain to prevent any of it from being taxed. If the gain exceeded the amount that could be excluded, you would have to pay tax on the gain in excess of the excludable amount. 

[daisy092288]

What if we revive a 1099-s with the gross proceeds not net and miss to report it because what we net was only $83,000 and we are married. Now the IRS is saying that we owe them $295,000? That is triple than what we gain on the property. How can we fix it?

[Anonymous]

if you used TurboTax for the year of sale you should complete the home sale worksheet.  this will transfer the information to form 8949.   assuming you are entitled to exclude the entire gain, the form will report no taxable gain (column h) send the form back with the notice and a signed statement stating that the entire gain is not taxable per form 8949 included.  based on the questions you answer in the home sale worksheet TT will determine if any portion is taxable. if any part of the gain is taxable you'll have to submit 1040-X with the form and a check for the tax due. the IRS will bill you for any penalty and interest due.

[daisy092288]

Thank you! But where can I fill in the payoff amount on the form 8949?  Our 1099s that we received only show the gross. Are they going to bill us the full penalty from the wrong calculation? Or they will adjust once we send the form 8949? I am at lost. 😕

[Critter-3]

The mortgage payoff is irrelevant ... it is not entered anywhere as it is not part of the calculation.  What you actually netted on the sale is also irrelevant.

Basic formula ...

Purchase price + cost to purchase + improvements + cost of sale = basis

Sale price - basis =  cap gain or loss.  

[Critter-3]

Either use the amendment program to help you complete the 8949 & Sch D using the home sale worksheet or just respond to the IRS using the prior mentioned basic formula to explain why you do not owe what they say...

See this TurboTax FAQ for help with amending.

There may be no tax due.  For the sale of a residence, up to $250,000 ($500,000 on a joint return where you both lived in the residence) of gain can be excluded from income if you lived in and owned the house for two of the last five years.

(You may have a smaller exclusion if the property was used as a rental during the five year period, and you may have income from recapture of depreciation if you claimed an office in the home deduction for the home.)

If you work through the interview on sale of a residence, Turbotax will compute the exclusion. Look under the wages and income tab for less common income, then sale of home.

I would only report the sale if:
    The gain exceeds the amounts that are exempt from tax, or
    You received a Form 1099-S from the closing agent.

A closing agent can get an affidavit or statement from you that the sale meets the requirements for exclusion and, if so, not send a Form 1099-S reporting the sale.  If the gain is fully excludible and you don't get a Form 1099-S, there is no reason to report the sale on your tax return.  If you do need to report it, use the following sequence:

     Federal Taxes, then
     Wages and income, then
     Choose what to work on, then
     Choose less common income, then
     Home Sale

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