It’s 1099-S Time!
By Laura J. Henneberry, SCRP, SGMS-T, Morreale Real Estate Services, Inc.
and Joan M. Brady SCRP, GMS, Morreale & Brady, P.C.
The deadline for mailing of the 1099-S form (used in the reporting of real estate sales) is upon us. This document will be arriving in mailboxes near and far.
What does this mean? It means that you could be receiving quite a few phone calls about a) why did I get a 1099-S?; b) where is my 1099-S?; and/or c) the ever popular: does this mean I owe taxes?
In the world of relocation, most filing providers will rely on the Certification for No Information Reporting Form as to whether or not a 1099-S needs to be filed with the IRS. If the employee and/or spouse answer “False” to any question, a 1099-S will be filed. Conversely, as long as the employee and/or spouse answer “True” to the questions and at least “n/a” to the last question, no 1099-S will be filed. Finally, if the employee and/or spouse does not return the Certification for No Information Reporting Form then the sale will be reported to the IRS via a 1099-S.
Whether or not a 1099-S is received by the employee does not eliminate the need for the employee to account for the sale of the home on his/her tax return. The filing of a 1099-S form does not automatically mean taxes will be owed by the employee. He/she should seek out competent tax counsel to determine exactly what the effect of the sale of the home is on his/her individual tax situation.
If the employee believes that an error has been made in either the information contained in the 1099-S form, believes that a 1099-S was filed in error, or that he/she should have received a 1099-S and did not receive one, it is important to review the Certification for No Information Reporting form and determine the appropriate next steps. Corrections can be done on the 1099-S form as well as voiding a 1099-S form that was filed inappropriately.
Some Relocation Management Companies (and corporations that do business with those companies) as well as in-house programs have made the decision to file a 1099-S form for every employee that accepted a buyout or did a BVO during the previous year. There is no harm in filing a 1099-S even if the employee answered the questions that would normally negate the necessity for filing. Remember: the employee has to account for the sale of the home whether or not a 1099-S was filed.
If you have any questions on the process, the Certification for No Information Reporting form, or general relocation questions, please contact Morreale RES at 630.545.5300 or firstname.lastname@example.org.
Note: Nothing in this article should be construed as tax/legal advice. Please seek out competent tax and legal advice for your own particular situation.