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M
maughact
Level 5
October 21, 2024
Question

1099-NEC from mortgage company

  • October 21, 2024
  • 1 reply
  • 8 views

My client received an IRS bill for a 1099-NEC  from a mortgage company.  My client had a foreclosure and the payment reported on the 1099 was for a move out payment.   Would this type of payment be subject to self-employment tax?  I'm wondering if it's worth drafting a letter to IRS asking to wave that part of the tax?

Thanks

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    1 reply

    abctax55
    abctax55
    Level 15
    October 24, 2024

    A Form 1099-NEC for debt forgiveness is 100% wrong.  I don't think anyone is *in the business*  of collecting 'cash for keys'.  

    So yes, challenge the SE tax on this with the IRS.  I'd also bug the h*ll out of the mortgage company to correct it.

    HumanKind... Be Both
      M
      maughactAuthor
      Level 5
      October 24, 2024

      Yes, we are challenging it. I agree.

      Thanks

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