Why timeshare 1099-misc?

[lhirschehirsch]

We paid a legal team to help us get out of a timeshare in 2016. The timeshare company sent a 1099 misc income form and we never received any money from them. What can we do?

[Patrice · Accepted solution]

You will need to enter the 1099-MISC into your tax return.  You want to make sure that you file it because the timeshare company also sent a copy of this 1099 to the IRS and if you don't file it then you may get a letter from the IRS.  Generally, the income on this form is subject to federal income tax and state income tax. 

If you receive a Form 1099-MISC that reports your miscellaneous income and you don’t include the income on your tax return, you may also be subject to a penalty. Failing to report income may cause your return to understate your tax liability. If this occurs, the IRS may impose an accuracy-related penalty that is equal to 20 percent of your underpayment.