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UNDERSTANDING IRS FORM 1099-S
Need help understanding IRS Form 1099-S?
The purpose of IRS Form 1099-S is to ensure that the full amount of gross proceeds from sales are being reported to the IRS each year.
If you have received a Form 1099-S, it must be included on your tax return. Form 1099-S is issued when a real estate transaction occurred; usually the sale of a home. The form is normally issued by a lending company or title company. And the 1099-S is issued to the seller, who must report the sale on their personal income tax return.
The 1099-S includes some of the information needed to report the taxable transaction of a home sale or other real estate transfer. To report the sale the taxpayer needs the purchase date of the property, the sale date, purchase price and sale price. The 1099-S will have the sale date (box 1) and the sale price (box 2). Taxpayer must then obtain the purchase date and purchase price from the original purchase documents, such as a HUD statement or the escrow documents. Need help filing your 1099-S? Call us today at (888) 676-4319.
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At Community Tax, LLC, we pride ourselves on being a full-service tax company, offering a wide range of tax related services geared towards both individuals and businesses. If you’ve recently received Form 1099-S and need help understanding it, Community Tax can help!
Once all information is obtained it is reported on the 1040 tax return. Where it is reported depends on the type of property involved. The most common is a property transaction concerning Form 1099-S for the sale of a personal residence. If the property sold is a personal residence, then it is reported on Schedule D. On that schedule the purchase price and sale price are used to determine the gain or loss on the sale. Gains are taxable but losses are not deductible. Although gains on a home sale are taxable, you may qualify to exclude $250,000 of that gain from your income, or $500,000 if filing jointly. Any gain beyond this exclusion is taxable. And the rate that the taxable amount is taxed on depends on whether the gain is long-term or short-term, which is determined by the purchase and sale dates. Still unsure how to file and report your property transaction? Contact us today.
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