How to File Form 1099‑S in 2026 A Simple Guide for Payers

Ever heard of Form 1099-S? If you’re in the real estate business, you would have. Like all IRS forms, filing this one correctly is non-negotiable. In this blog, we explain everything you need to know about how to file 1099-S. Shall we get started?

What Is Form 1099-S?

Basically, Form 1099-S reports proceeds from real estate transactions to the IRS. But why is this form important? It helps the IRS match reported income to what sellers declare on their tax returns. Pretty much every real property transfer is reported on this form.

There’s no de minimis dollar threshold for Form 1099-S. Reporting is required regardless of the amount unless a specific IRS exception applies.

Who’s responsible for filing Form 1099-S?

The law has a clear order for that. It’s usually the settlement agent (if you’re listed on the Closing Disclosure) or the person responsible for closing the transaction. If there’s no settlement agent, the duty falls according to this order: mortgage lender, seller’s broker, then the buyer’s broker, and finally the buyer.

Here’s a tip: If you’re whether to file or not, it’s always safer to file. Because the penalties for not filing are costly and can reach $660 per return for intentional disregard.

Pre-Filing Checklist

What’s important before you even think of filing? Getting your documents sorted.

• Form W‑9 from the seller with a verified TIN
• Executed HUD‑1 or Closing Disclosure showing payer as the settlement agent
• Complete property address and legal description (parcel or lot number)
• Escrow closing date, total consideration paid and allocation of proceeds if multiple properties were included on a single closing statement
• Proof of the amounts (like escrow ledgers or wire receipts)

Note:

Hold onto all your documents for at least four years. This includes settlement statements, exemption certifications, and TIN verification results.

Knowing When to Report When Not To

Does every real estate transaction need to be reported? Not really. Knowing the 1099‑S exemption rules is just as important to avoid unnecessary filings.

Reportable Transactions

• Sale of commercial or rental property
• Lump‑sum sale of timber rights or mineral interests
• Condo sold to an investor or REIT
• Sale of stock in a co‑op housing corporation
• Involuntary conversion by condemnation where proceeds are paid to seller

Common Exemptions

• If the seller signs a statement confirming the sale of their principal residence or their primary home, all the gain is excluded under the $250k/$500k home-sale exclusion rules. If there was no certification, a 1099-S will have to be filed.
• Transfers between spouses during a divorce only when there is no reportable sale or exchange.
• Like-kind exchanges (Section 1031) handled by a qualified intermediary
• Gifts with no money changing hands
• Foreclosures where the lender files Form 1099-A

Reminder: For each exemption, you need proper documentation to protect yourself against IRS inquiries or CP2100/CP2100A notices.

Form 1099-S: A Box-by-Box Guide

Here are the 1099‑S filing steps. Getting the details right in each box is very important.

1. Payer Information: Your name, EIN, and address must be exactly what appears on Form 1096 and in the IRS FIRE or IRIS transmitter profile.

2. Gross Proceeds Box 2: Report the total consideration which includes cash, the fair market value of any property or services received, and any liabilities like notes or mortgages that were paid off at settlement. Don’t subtract commissions, fees, or other selling expenses.

3. Box 1 (Closing Date): If you used Closing Disclosure, use that date. If not, use whichever comes first: when the title transfers or when ownership burdens shift to the buyer.

4. Box 4: Check this box if the transferor received something other than cash, such as property or services as part of the deal.

5. Box 5: Check this box if the transferor is a foreign person. This includes nonresident aliens, foreign partnerships, foreign estates, and foreign trusts.

Key 1099‑S Deadlines 2025TY (To be filed in 2026)

Note:

• If you file 10 or more information returns in total electronic filing is mandatory.
• The IRS is transitioning to a new system called IRIS (Information Reporting Intake System). While the old FIRE system might still work for 2026, IRIS will be the only option for 2027 filings.

1099Online can streamline this entire process for you. Features like batch uploads, real‑time TIN match, PDF recipient copies, and CF/SF state filing are all available in one dashboard to cut the payer’s prep time by up to 70%.

Special Situations to Watch For

• Foreign sellers: When a foreign person sells U.S. real estate, it must be reported on Form 1099-S, unless it is exempt. In addition, follow FIRPTA withholding procedures using Forms 8288 and 8288-A.
• Missing or Wrong TIN: If the seller won’t provide a TIN or it doesn’t match IRS records, you must still file Form 1099-S. You don’t have to apply backup withholding on real estate transactions, even with a missing TIN.

Penalties to Avoid

How to Navigate State Filing Requirements

Your responsibility doesn’t end with federal filing. Many states have their own filing requirement which you must be aware of:

For Tax Year 2025, 33 jurisdictions participate in the Combined Federal/State Filing Program (CF/SF). For example, states like California, New Jersey, Oklahoma, Wisconsin, among others, take part in this. What does this mean? When you file with the IRS, they send your data to these participating states for eligible forms automatically. Convenient, right?

But there are exceptions. Not all states participate in this CF/SF program. And even participating states have their nuances. So, always make sure that you check Section 12 of Publication 1220 for the up-to-date participant table and any state-specific direct-file requirements.

Due dates: State recipient copy deadlines generally align with the January 31 federal deadline. However, state agency deadlines vary between February 28 and March 31.

Common Mistakes and How to Fix Them

Real-Life Examples

1. A $450,000 principal residence where the seller provides proper certification.

Payer action: No filing is needed, but you must retain that certification for four years. The IRS accepts the exemption, and you won’t receive any notice.

2. A $900,000 commercial office sale

Payer action: File 1099‑S with $900,000 in Box 2 so that the buyer can establish their basis in the property.

3. A condo sold through a section 1031 exchange.

Payer action: Don’t file 1099‑S, but you need to retain the Qualified Intermediary documents, and the transaction has to be reported on Form 8824.

4. A $95,000 lump‑sum timber sale

Payer action: The seller reports this under the timber rules (for example, section 631(b)), following IRS guidance including Form T and Publication 225).

5. A short sale where the seller refuses to provide their TIN.

Payer action: You do not apply payer backup withholding. File Form 1099-S reporting all the required items, but no withholding reported.

FAQs

1. Does any sale price exempt you from filing?

No, it doesn’t work that way. Every reportable transfer must be filed unless the transaction meets a statutory exemption, and you have the required certification on file.

2. If multiple people share closing duties, then who must file?

The person listed as the settlement agent on documents like the Closing Disclosure is the payer. If that designation is unclear, the obligation passes first to the transferee’s agent and then to the transferor’s agent. You can also refer to that hierarchy mentioned earlier in the blog.

3. Does corporation status exempt the seller?

No, and this misconception causes problems. Entity type alone does not exempt a transaction from Form 1099-S reporting.

4. Suppose the closing date changes after preparing the form, what should the payer do?

All you have to do is submit a corrected return reflecting the final closing date.

5. Are electronic signatures considered valid on exemption certifications?

Yes, provided they meet the IRS requirements for a valid written, signed certification under penalties of perjury.

6. Is it okay to e‑file directly with IRIS?

Yes, of course. IRIS is free to use. However, it has limited features. With an e-filing platform like 1099Online, you get access to features like bulk uploads, state compliance, TIN Match, and audit trail.