IRS Form 1099-S is used to report certain types of real estate sales and exchanges. A lot of property owners are generally aware that there is a tax liability and filing form that comes with selling their property, but most are generally unfamiliar with this form until it arrives. These Proceeds from Real Estate Transactions forms are distributed when homes are bought and sold, mostly by accountants working on the transactions themselves. Many have questions about what part of their tax returns account for this income. The answer? Most often, but not always, as investment income.
For this reason, among others, it’s important to stay on top of your IRS Form 1099-S filings. You don’t want property sellers and clients, stressed about this unfamiliar form to come calling because you’re late to provide them with the necessary paperwork. Plus, you’ll need to remain aware of potential penalties levied by the IRS for failing to meet the January 31st deadline. There are typically several other types of 1099 forms associated with form 1099-S, so you’ll need to wear a lot of hats in order to finish this one accurately and efficiently.
IRS Form 1099-S Filers and General Information
In the vast majority of real estate deals—especially residential property holdings—the filer for the IRS Form 1099-S is readily apparent. The person or entity responsible for closing the transaction is the one who must file. This is most often the title/escrow company, or settlement agent when a Settlement Statement (HUD-1) is used.
That said, not all real estate deals are simple, and there may be multiple people directly involved with closing the transaction. You can typically figure out who must file by reviewing the IRS instructions for Form 1099-S. Even then, it may be necessary to contact the IRS to make a final determination. As evidence, take a look at the ambiguity of this statement, which was pulled from a section about what to do when there’s no closing statement OR when there’s more than one closing statement: “If there is more than one attorney described in (a) or (b), the one whose involvement is most significant is the person considered responsible for closing the transaction.” If that sounds confusing, you’re not alone.
Moreover, the rules are always subject to change. The IRS maintains a section on its site for Recent Developments related to IRS Form 1099-S. The federal government makes, on average, more than one change per day to the tax code, so it is important to stay up to date on these changes, especially if you work in real estate.
Find Software for Form 1099-S Filings
Dealing with complexity and nuance in real estate transaction tax reporting is inevitable, but the filing itself can be a lot simpler with the right software solution. The W-2/1099 Forms Filer from Advanced Micro Solutions (AMS) offers an intuitive, menu-driven platform with a range of nifty data management technologies that can make complying with your filing requirements more reliable and more efficient. Knowing what to look for in a 1099-S filing solution is half the battle, but we’ve made it easy.
Data Entry and Printing
- Entry screen resembles the actual forms, or the Browse command offers data entry using a spreadsheet format.
- A Common Payee File allows the user to avoid a lot of duplicate data entry.
- Data can be imported from nearly any source file.
- “Define” default values for things like State Code and ID.
- Automatic save and backup restore.
- Print prepared information on pre-printed forms with easy form alignment.
Data Reporting
- Print tables, worksheets, client letters, recipient lists, and mailing labels.
- Report generates hash totals for checking SSNs and TINs.
- Encrypted PDF files to securely email reports.
- Batch printing for multiple payer reports to save time and effort.
You can see our software in action by downloading our demo. If you have any lingering questions, call our Sales and Information team at (800) 536-1099. You can buy and download our software products whenever you’re ready.