The REO co. who handled my foreclosure gave me $3k to move out. They sent a 1099 to the IRS. Am I considered an indep. contractor? Do I owe taxes?

Asked by Jd, Los Angeles, CA Thu Mar 3, 2011

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19
Gerard Carney, Agent, Spring Hill, FL
Thu Mar 3, 2011
You receive a 1099 if you gain from a property, in the case of banks, they can give you a 1099 for the 3k they gave you, they can give you a 1099 for the difference of the home value or sale and what you owed, this was a capital gain on your part, even though you lost the home in foreclosure. Yes some of the answers below were a bit off, the simple fact is that it is a capital gain on the home you lost to foreclosure. If you lived in that home for 2 of the last five years as your main residence then you can claim your capital gain exemption on the residence for up to $250,000 for a single person or up to $500,000 for a married couple filing jointly. Come on Brokers this was Real Estate 101 stuff, why did you go elsewhere with some of those numbers.
2 votes
Daniel Choi, Agent, Los Angeles, CA
Tue Apr 26, 2011
My answer is Yes because the 1099 form was sent to you because the lender would report to IRS and you have to declare as income when doing tax filings. The $ 3,000 relocation fee is part of lender's payment to owners concluding short sale thru HAFA (Home Affordable Foreclosure Affrodable) program. Ask your tax advisor about the implication.

Good Luck !

Daniel Choi
Broker Associate
Nextage Capital Advisors
1521 Wilshire Blvd
Los Angeles, CA 90017
http://www.michantli.com
0 votes
Heather Paul, Agent, Santa Monica, CA
Fri Apr 22, 2011
Yes ,yes, and maybe. You will need to report this as other income. Many people do not realize that they will be receiving a 1099 for the funds to move out but this is very common.

Heather Paul, Realtor
Coldwell Banker Residential Brokerage
(310)586-0364
0 votes
David Cooper, Agent, Los Angeles, CA
Wed Apr 20, 2011
Once a 1099 is triggered, you are pretty much stuck. The IRS computers will match that against your tax return to see if it is documented. Your tax preparer should determine if you owe tax on the 1099, but you will have to report the 1099.

David Cooper Las Vegas Foreclosure Investor in Bank Owned REOs with Cash Flow. email or call for FREE list +1-7024997037 not a real estate agaent
0 votes
David Akram , Agent, Granada Hills, CA
Wed Apr 20, 2011
Best if you speak with your Tax Accountant for such IRS matters. We, Realtors do not have the expertise in this subject matter to make a credible response.

David Akram
Realtor, DRE# 01891274
661-505-8550
Century 21 All Moves
Contact: http://contactme.davidnewhome.com
Web: http://www.DavidNewHome.com
Blog: http://blog.davidnewhome.com
FREE Monthly Newsletter: http://newsletter.davidnewhome.com
Web Reference:  http://www.DavidNewHome.com
0 votes
Kathleen Bec…, Agent, Santa Monica, CA
Fri Mar 4, 2011
Refer back to your "Cash for Keys" agreement that you signed when you were issued the $3000. And also , check with your accountant.

Kat Becker
Prudential California Realty
0 votes
Kathleen Bec…, Agent, Santa Monica, CA
Fri Mar 4, 2011
Refer back to your "Cash for Keys" agreement that you signed when you were issued the $3000. And also , check with your accountant.

Kat Becker
Prudential California Realty
0 votes
Richard "RJ"…, Agent, Beverly Hills, CA
Fri Mar 4, 2011
Call your accountant, but more than likely, you will need to pay taxes on this 3k as it is most likely considered "income"
0 votes
John Arendsen, Agent, Leucadia, CA
Thu Mar 3, 2011
Certainly wouldn't waste a $250 to a 500k capital gain for 3k.
0 votes
Monique & Joe…, Agent, Beverly Hills, CA
Thu Mar 3, 2011
Hello JD,

You will need to check with your accountant but you will likely need to claim this when you file your taxes.

Monique Carrabba
The Carrabba Group
Keller Williams Hollywood Hills
mcarrabba@kw.com
(323) 899-2900
0 votes
John Arendsen, Agent, Leucadia, CA
Thu Mar 3, 2011
Very good answers. All the more reason to consult a tax specialist.
0 votes
Jane Grant, Agent, Aguanga, CA
Thu Mar 3, 2011
The IRS, expects that anyone who pays someone else an amount over $650.00 to issue a 1099 to that individual. Seek out additional advice from a tax professional!

~~~
0 votes
Janey Bishop, Agent, Encino, CA
Thu Mar 3, 2011
1099's are generated for many types of income -rent, interest, profit on a sale, which is why you received one. You need to report it on your tax return. When you prepare you tax return you will see if it increased your tax liability. The IRS will be looking for you to declare income from all W2's and 1099's issued to your social security number so it would be risky to omit it.
0 votes
Ron Escobar -…, Agent, Beverly Hills, CA
Thu Mar 3, 2011
It depends...
and yes ask your tax advisor... or if you are using online software, then ask their help line,,, or better yet contact the IRS
http://www.irs.gov/help/article/0,,id=96730,00.html
Telephone Assistance for Individuals:
Toll-Free, 1-800-829-1040
Hours of Operation: Monday – Friday, 7:00 a.m. – 10:00 p.m. your local time (Alaska & Hawaii follow Pacific Time).
0 votes
John Arendsen, Agent, Leucadia, CA
Thu Mar 3, 2011
I'm in concert with all the other answers. I'm just a dumb ole RE broker and broken down general contractor. What business do I have giving anybody tax advice?
0 votes
Alisha Chen, Agent, Irvine, CA
Thu Mar 3, 2011
Hi JD:

Usually, any income for any reason is considered taxable unless you have a special case. Please talk to your CPA who does your annual tax and based on your situation, he/she can let you know.
0 votes
Sara Mehrpou…, Agent, Los Angeles, CA
Thu Mar 3, 2011
You need to show that to your tax professional. They should advise you.

Sara Mehrpouyan CDPE
Rodeo Realty
818-903-2040
Dre Lic#01712757
0 votes
Anna M Brocco, Agent, Williston Park, NY
Thu Mar 3, 2011
When it comes to any tax related issues, it's in your best interest to consult with your tax professional; he/she can best advise...
0 votes
Dallas Texas, Agent, Dallas, TN
Thu Mar 3, 2011
Confer with your CPA who does your taxes

Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
972-699-9111
http://www.lynn911.com
0 votes
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