M7047 Posted February 9, 2023 Report Share Posted February 9, 2023 Have a client that received money for "Lost use of funds" and being told it would be reported to the IRS as required by law. They never received anything other than the letter. Would I just place the amount like it was an interest payment or would that confuse things, since there was no 1099? Quote Link to comment Share on other sites More sharing options...
Max W Posted February 9, 2023 Report Share Posted February 9, 2023 Please elaborate a little more on this. How were the use of funds lost? Who issued the check? Was it an insurancepayment? Were the lost funds reported as a deduction? Quote Link to comment Share on other sites More sharing options...
M7047 Posted February 9, 2023 Author Report Share Posted February 9, 2023 It was from their mortgage Co. They issued them a check. This is the letter they received. Nothing was ever deducted, as they can't itemize. Thanks 17 minutes ago, Max W said: Please elaborate a little more on this. How were the use of funds lost? Who issued the check? Was it an insurancepayment? Were the lost funds reported as a deduction? Quote Link to comment Share on other sites More sharing options...
mcbreck Posted February 9, 2023 Report Share Posted February 9, 2023 Personally I'd claim the $396 as interest earned. 6 Quote Link to comment Share on other sites More sharing options...
jklcpa Posted February 9, 2023 Report Share Posted February 9, 2023 I agree that the tax portion of the refund is nontaxable since they used the standard deduction, and also agree with mcbreck to report the $396 as interest income. 6 Quote Link to comment Share on other sites More sharing options...
M7047 Posted February 9, 2023 Author Report Share Posted February 9, 2023 33 minutes ago, jklcpa said: I agree that the tax portion of the refund is nontaxable since they used the standard deduction, and also agree with mcbreck to report the $396 as interest income. I was thinking that the 396 should be interest, just wasn't sure if it would flag anything since they never received a 1099. Thanks everyone. 1 Quote Link to comment Share on other sites More sharing options...
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