Cash for Keys and Taxes
June 13, 2012
Q: Do I get a 1099 for any Cash for Keys incentives?
You will receive a 1099 tax form for any Cash for Keys incentives issued to you.
Example: Here’s Bank of America’s disclosure on the tax implications of “Cash for Keys” incentives: “The amount of any deficiency and relocation assistance will be reported to the Internal Revenue Service (IRS) on the appropriate 1099 Form or Forms. We suggest that the homeowner contact the IRS or their tax preparer to determine if they have any tax liability.”
Here’s another Bank of America disclosure on cash for keys and taxes:
“Q: Will the relocation assistance funds be reported on the HUD-1?
A: Yes, funds received at closing will be documented on the HUD-1, and a 1099-MISC will be issued.”
So get with your CPA and set aside some of the incentive money because you most likely have to pay an ordinary income tax rate on it.
Cash for Keys Eligibility