My Real Estate Agent issued 1099-nec for the commission towards closing cost. Is this considered income?

Real estate commission rebates are not taxable income but reduce your home's basis.  

As an example, if you purchase the home for $200,000 and receive a $1,000 real estate commission rebate from your realtor, your cost basis in the  new home becomes $200,000 - $1,000 = $199,000.

The problem comes in reporting the 1099-MISC which has been issued to the IRS.  It would be preferable if the 1099-MISC would be withdrawn by the issuer.  

If the 1099-MISC is not withdrawn, follow the steps below to report the income and reverse the entry.

• Select Federal from the left side menu.
• Click on Wages & Income.
• Scroll down to Less Common Income.  Click Show more.
• Click Start / Revisit to the right of Miscellaneous income….
• Click Start / Revisit to the right of Other reportable income.
• At the screen Other Taxable Income enter a description such as 'Real estate commission rebate' and the dollar amount.
• At the screen Other Miscellaneous Income Summary, select Add another miscellaneous income item.
• At the screen Other Taxable Income enter a description such as 'Real estate commission correction' and a negative number.

The entry will be reported:

• on line 8z of Schedule 1 of the Federal 1040 tax return, and 
• on line 8 of the Federal 1040 tax return.

Make sure that you keep records of all transactions. Later, you may need to demonstrate to the IRS that this is not taxable income.

View the entries at Tax Tools / Print Center / Print, save or preview this year's return / Include government and TurboTax worksheets.

See this TurboTax Best Answer.