Cash for Keys and taxes

[ralyks4]

What is the name of your state (only U.S. law)? CA

I understand I have to pay taxes on "cash for keys", but do I need to also pay self employment taxes? This was not a business or employment. I just had to move because my landlord was foreclosed on.
I received a 1099-MISC indicating box 1 non-employee compensation. Do I need to enter as a business (schedule C and pay self employment/social security taxes? or can I just enter on 1040 line 21 as misc. income?
Thanks all.

[tranquility]

You know, I know this kind of stuff, and I don't know. While I'm going to give an answer, check back in a week or so and I'll do a little research.

I'd say no, you don't have self-employment taxes on the amount. I'd report it on the front of your 1040 under "other income" and not on your schedule C. I would not complete an SE form. (Again, check back. I'll do some research.)

Good question which I suspect I'll see more of in the years to come.

[ralyks4]

Originally Posted by tranquility

You know, I know this kind of stuff, and I don't know. While I'm going to give an answer, check back in a week or so and I'll do a little research.

I'd say no, you don't have self-employment taxes on the amount. I'd report it on the front of your 1040 under "other income" and not on your schedule C. I would not complete an SE form. (Again, check back. I'll do some research.)

Good question which I suspect I'll see more of in the years to come.

Thank you for your help. I was suprised in searching online that I couldn't find much on this with all the foreclosures last year.

[tranquility]

I still don't think you should have to pay SE taxes on the amount. I just don't see this as services you performed, but couldn't find a clear answer. However the box checked on the 1099 is problematical. If you don't report it and pay SE taxes, you *will* get a letter from the IRS asking for an explination.

See if you can contact the one sending the 1099 and ask their justification for making it a non-employee compensation. They deal with this a lot more and they might have a quick reference of a code section they're basing it on.

[ralyks4]

Originally Posted by tranquility

I still don't think you should have to pay SE taxes on the amount. I just don't see this as services you performed, but couldn't find a clear answer. However the box checked on the 1099 is problematical. If you don't report it and pay SE taxes, you *will* get a letter from the IRS asking for an explination.

See if you can contact the one sending the 1099 and ask their justification for making it a non-employee compensation. They deal with this a lot more and they might have a quick reference of a code section they're basing it on.

Thank you for your help. The bank won't talk to me. I am just a tenant that was in their way. I think I'll take my chances claiming it as "other income". The only references I can find state it is taxable at my usual tax rate and don't mention SE.

[hetz8500]

Originally Posted by ralyks4

Thank you for your help. The bank won't talk to me. I am just a tenant that was in their way. I think I'll take my chances claiming it as "other income". The only references I can find state it is taxable at my usual tax rate and don't mention SE.

I was a tenant in a foreclosed house last year and received a Cash for Keys deal in September. The real estate agent we were dealing with had us (3 roommates & myself) fill out W-9's and send them in to her. When we moved out of the house we got our checks and they were from a Bank Directly. It's now March and none of us got 1099's. Does this mean the bank did not report our income to the IRS? I have called the bank, mortgage company, and the agent and no one seems to want to help me out. Do I need to report this income? How do I go about doing that without a 1099? Any help would be appreciated.

[Indiana Filer]

hetz,

The protocol on this forum is for people to start their own thread with their own situation, so that it doesn't cause confusion between the original question and the new question.

Once you start your own thread, you'll get great answers.