This is the first year that my security deposit for my appartment has started to earn interest (it is entirely managed by the rental company). I am totally frustrated with how this is turning out.
So for $850, I earned $11.34 interest (horrible rate, but that's not the point). Out of which an "agent admin fee" of 1% = 8.50 was deducted, and I was cut a check of $2.84.
The really bad news however is that they issued me a 1099-INT for $11.34 interest income, of which I owe 33% tax, which is more than the entire check I got. So my question is: is this 1% agent admin fee deductable at all with standard deduction? We do not itemize and will certainly not start itemizing just because of this.
It is just really frustrating that I end up paying money for this supposed "interest income"!
Many thanks!
2007-01-28 19:20:12 · 2 answers · asked by crimsonwine 2 in Business & Finance ➔ Taxes ➔ United States
The interest is taxable. The fee would be deducted as a miscelleaneous itemized deduction. Since you use the standard deduction it is not taxable.
Is the agent fee legal I've never seen one charged here.
2007-01-28 22:35:04 · answer #1 · answered by waggy_33 6 · 0⤊ 0⤋
Whether interest is required on the deposit or the 1% annual administrative fee on the security deposit is legal is a local matter you should check into, call your city and ask who handles these disputes.
The fee is not deductible, but the interest income of course must be included as income.
2007-01-28 22:22:56 · answer #2 · answered by ninasgramma 7 · 0⤊ 0⤋