Have Tax Questions? Ask a Tax Expert for Answers ASAP
Hello! I am a CPA here to assist you with your tax questions. My goal is to provide you with excellent service today.
How are you today?
Your requested professional is not online, but I can assist you
You only have to send a 1099 if you pay out more than $600 in the course of your business.
If this was a personal issue, and not a business deal, then no 1099 would be required
The recipient of the forfeited earnest money will include the amount in their taxable income in the year the deposit was forfeited.
If the earnest money was given to the seller from a real estate broker, the broker will issue the 1099 form
If you gave the funds to a Real Estate Broker, they will take care of issuing the 1099 and you will not have to worry about it, even if this was a business deal
Do you have any further questions about this?
I am the seller of real estate. The earnest money is being held by the broker. The purchaser is forfeiting the earnest money. The broker will send me the funds. Is the broker requirred to send me a 1099? They are asking for W-9 information. Since no real estate was sold and I did not perform a service, why would they issue one to me?
Yes, you would be issued a 1099 unfortunately. This is taxable income to you - the receipt of the earnest money funds
You will put the earnest money on the "other income' line of your tax return. You can take any expense deductions that you incurred as a result of this deal, as itemized deductions on Schedule A
They must issue a 1099 to anyone that they send over $600 in the normal course of their business