maughact
Level 4
10-21-2024
11:46 AM
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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
2 Comments 2
abctax55
Level 15
10-24-2024
11:42 AM
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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.
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