May 5, 2009

Get a Form 1099-C this year? Here is some help....

If you have lost a home in foreclosure or have been unable to pay your debts, you most likely have received a Form 1099-C from the lending institution. The Form 1099-C, Cancellation of Debt,is reported by the lending institution when it has to "write-off" a debt that you owe them. This amount must be reported on your tax return and could, under certain circumstances, be taxable income.

Given the number of Forms 1099-C issued in 2007 and forecasted for the future and the number of foreclosures (approx. 2 million Forms 1099-C for 2007) in 2008, there will be many American taxpayers in the post-foreclosure dilemma: potential tax debt from debt forgiveness.

Fortunately, the IRS has responded with information to those affected by the confusing process of whether debt forgiveness, i.e. Form 1099-C cancellation of debt reporting, is taxable. The IRS has actually developed an updated publication for those inflicted by the recent foreclosure pandemic. Even better, the IRS has explained it in laymen's terms in a recent Phone Forum. This transcript (has it in audio also) explains most of the confusion around debt forgiveness and taxes.

1 responses:

Anonymous,  May 25, 2009 at 11:06 AM  


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Warm Regards Team

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