turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
Close icon
Do you have a TurboTax Online account?

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

hongto
Returning Member

tax status for a buyout payment

What is the tax status for the recipient of a buyout (incentive to vacate premises), in the state
of California? Is it taxed as capital gains and if so, how can I avoid this? If the payment is worded as a rent rebate, is it taxable? In other words what are the tax ramifications of the buyout and can I avoid the taxes?

1 Reply
AdamNe
Employee Tax Expert

tax status for a buyout payment

Hello @hongto !

 

Thanks for the question. 

 

In most situations I have seen, buyouts like these are considered "other" taxable income, and the payer issues a 1099-MISC to the payee. This income will be subject to your highest ordinary income tax rate (not a lower capital gains rate), so keep this in mind when negotiating! 

 

All my best, 

Adam, EA

TurboTax Live Expert

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
Use your Intuit Account to sign in to TurboTax.
By selecting Sign in, you agree to our Terms and acknowledge our Privacy Statement.
message box icon

Get more help

Ask questions and learn more about your taxes and finances.

Post your Question
message box icon

Ready to start your taxes?

Hand off your taxes, get expert help, or do it yourself.

See Pricing

Related Content

Manage cookies