Archive for the ‘1099a’ Category

What Is The Difference Between A 1099A & 1099C

Thursday, September 29th, 2011

 

There seems to be a ton of confusion as to what to do with the 1099A  after you got rid of your . That you more or less did by losing your home at the same time in the form of a foreclosure or a short sale.  Not to mention the 1099C that you may get as well. So hopefully this will clear it up a little.  But when you do get your forms do save them and do bring them to your tax advisor to see how they may help you filing them correctly.  There are a ton of homes in the market just like many other markets where the homes ended in foreclosure or a short sale.A 1099A hopefully followed by a 1099C is what the previous home owners would be getting.But please understand that this blog is only informational and for specific situations you need to consult your tax preparer.

In essence, your 1099A is a receipt from your lender saying that you have taken your home back.Though its just that it is not a taxable later that would come later. Whenever you get a 1099.

1) If the home that was foreclosed was in no way an investment property or a rental but your principle residence.Due to the Mortgage Foregiveness Debt Relief Act of 2007, the difference form what you owed to what the bank sold your home will not involve a taxable event. But this act may not be valid after December 31, 2012 as that is when it expires.

2) If you are insolvent when your debt is being cancelled, you do not have to pay taxes so that is when you should see your tax advisor.Insolvency is the situation where you have more debt than assets and so you would have to submit an IRS form 982 to prove your insolvency.

3) If you need to use it, it should be your last resort because debt is cancelled only because of bankruptcy.

Selling these homes in a foreclosure or a short sale would usually lead to these homeowners recieveing a 1099A.Always remember that a 1099A is nothing but a reciept from your lender saying that they have accepted your property as a partial satisfaction for the debt your owed.  But the 1099A is not going to be the documentary evidence of cancellation of debt that you need to file with your tax return. The cancellation of debt is because more than likely you owed more on the home than it was worth.So the fact is that there is still a balance owning on the loan.The 1099A is nothing but a neutral tax document.

The 1099C informs you as well as the IRS about the amount of the cancellation of debt. To some, the 1099C can mean trouble.

To find out if you will have a taxable event or not, you will have to work with your numbers. Depending on two things which is the dollar amount that is cancelled by your bank and whether you have more liabilities than assets.

Here is where the real problems start. Is getting that 1099C issued to you so you can do your tax return and not have to worry about that phantom income that the IRS would love to tax you on. Consider that you owed $500,000.00 on a home which the bank sold for $250,000.00 so the amount of your phantom income would be $250,000.00. There have been many home owners in the market that have been forced in Bankruptcy just for this one simple thing. Everay situation is different so contact your legal por tax professional for your specific situation.

Ein guter fehler ist ein beweis für intelligenzleistung, zur Webseite gehen wobei eine zielbedingte neukombination von handlungsweisen geschaffen wird, die aber dennoch nicht zum angestrebten ziel führt

I Got A 1099A & A 1099C For My Home

Friday, September 16th, 2011

 

There seems to be a ton of confusion as to what to do with the 1099A  after you got rid of your . That you more like did by losing your home at the same time either through a foreclosure or a short sale.  Not to mention the 1099C that you may get as well. So hopefully this will clear it up a little.  But when you do get your forms do save them and do bring them to your tax advisor to see how they may help you filing them correctly.  There are a ton of homes in the market just like many other markets where the homes ended in foreclosure or a short sale. The former owners of these homes will be receiving a 1099A and hopefully a 1099C shortly there after.  Please be advised that this blog is for informational purposes only do consult your tax preparer for your specific situation.

Okay so here it goes when you receive your 1099A it is basically your receipt from your lender that they have taken your home back.  It’s a just that but it’s not a taxable event that will come later. Now a foreclosure is viewed as a sale of property and there may be a taxable event, when you get a 1009C with a few exceptions.

1)      If the home that was foreclosed was your principle residence and not investment property or a rental.  The Difference from what you owed to what the bank sold your home will not involve a taxable event due to the Mortgage Foregiveness Debt Relief Act  of 2007. But this act does expire in December 31 of 2012.

2)      Now this is when you see your tax advisor because if you are insolvent at the time the debt is cancelled then you will not have to worry about the tax.  Being insolvent is when you have more debt than assets basically this is where will have to submit to the IRS form 982 with your tax return to show that you are insolvent.

3)      The debt is cancelled due to bankruptcy, this should be your last resort if you need to use it.

Most homeowners will receive a 1099A usually once these homes have been sold as a foreclosure or they have been closed in a short sale.  When you receive a 1099A remember this is just the receipt from the lender saying that they have accepted the property as partial satisfaction for the amount of the debt owed.  But the 1099A is not going to be the documentary evidence of cancellation of debt that you need to file with your tax return. The cancellation of debt is because more than likely you owed more on the home than it was worth. So there is still a balance owning on the loan.  The 1099A is just a neutral tax document.

The trouble begins with the 1099C this is going to tell you and the IRS the amount of the cancellation of debt.  This 1099C can cause problems for some.

This is where you need to work the numbers as to whether you will have a taxable event or not. Depending on the dollar amount that is being cancelled by your bank, and whether you have more liabilities than assets.

Here is where the real problems start. Is getting that 1099C issued to you so you can do your tax return and not have to worry about that phantom income that the IRS would love to tax you on. For example you owed $500,000.00 on a home that the bank sold for $250,000.00 so your phantom income is $250,000.00. There have been many home owners in the market that have been forced in Bankruptcy just for this one simple thing. Just keep in mind each situation is different and consult your legal and tax professional for your specific situation.

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