rental incomes reported on 1099-NEC

Forum|Forum|3 years ago
February 21, 2023
2 replies
14 views

Taxpayer received form 1099-NEC for rents received ($4500 through emergency assistance program) for his rental property in 2022.

Taxpayer contacted payer to make correction and issue form 1099-Misc instead. But, payer refused to do so. What should we do?

Can we just include this $4500 in Sch E "rents received" and ignore this wrong 1099-NEC? Or, do we need to indicate somewhere in the tax return to inform IRS this wrong 1099-NEC issue?

Thank you.

Lacerte Tax

This topic has been closed for replies.

Best answer by PamC

I generally enter the amount on a Schedule C as income with an offsetting "Other deduction" that says something like "Rents reported on 1099-NEC in error". Then it doesn't hurt to enter rental income using the supporting detail box and entering the 1099-NEC rents with a description and clicking the statement bubble so it goes with the return.

P

PamCAnswer

Level 6

I generally enter the amount on a Schedule C as income with an offsetting "Other deduction" that says something like "Rents reported on 1099-NEC in error". Then it doesn't hurt to enter rental income using the supporting detail box and entering the 1099-NEC rents with a description and clicking the statement bubble so it goes with the return.

BobKamman

Level 15

For those with no qualms about reporting fictitious income and deducting fictitious expenses, play "trick the IRS computer."

I attach an explanation to the return, assuming IRS will not read it but it can be sent again if a notice is received from IRS. If you assume that every IRS reviewer won't be able to spot 4,500 on Schedule E and figure out it's the amount shown on the 1099, you're probably half right. But "automated underreporter" is not fully automated. An IRS employee is trained to spot mismatches like that.

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