Originally Posted by keemp
#1;i filled bk chapter 7 and got discharged in june 2014. I havent been paying my mortgage(s) since april my mortgage company hasnt started the foreclosure process yet.
My bankruptcy lawyer told me that if i receive a 1099c it will be cancel due to my bankruptcy however he asked me to talk to a cpa for more details etc...
#2;Now my question what if foreclosure takes a place in 2015 (not this year) and i receive a 1099c in 2016 would that be consider a income and would i be paying taxes?..
this is getting really confusing, not sure if anyone could help me regarding this issue. any help suggestion greatly appericted
#1;As you owe a debt that was canceled by the lender, it's as if the lender gave you the money to pay off the debt. The canceled debt, then, is essentially income for you, and must be reported on your 1040. To assist you in reporting your canceled debt, the lender is required to provide you with a Form 1099-C;however, there are certain situations in which your debt can be cancelled, but you don't have to report it as taxable income.One example is: the debt was discharged in bankruptcy (unless the debt was incurred for business or investment purposes). Or under the “insolvency exclusion in which you are insolvent to the extent that your liabilities ,what you owe, exceed your assets what you own. If the total amount by which you are insolvent is larger than the amount listed on the 1099-C, you can exclude the entire amount listed on the 1099-C from your income. You’ll have to file Form 982 with your tax return to claim this exclusion. If you the amount by which you are insolvent is less than the amount on the 1099-C then you may be able to avoid including part of that amount in your income.
#2; no; not all institutions send a 1099-C. In addition, sometimes a 1099-C may be sent a few years after the bankruptcy discharge.A creditor sends a 1099-C to you after they wrote-of your debt. If you had not filed bankruptcy, then you may have to report the amount of forgiven debt on the 1099-C on your return as gross income and pay taxes on the amount to the IRS. However, since you filed bankruptcy, generally there are no income tax consequences, but you will need to take appropriate action to handle the 1099-C; A 1099-C is generated by a financial institution, such as a lender, after a qualifying event. A qualifying event occurs when the entity has written-off or cancelled a debt in excess of $600. Cancelling the debt requires the bank to send you the 1099-C regardless of whether you received a discharge in bankruptcy. This means the 1099-C you received was likely generated appropriately, but does not mean that you must take it as actual income on your tax return. You will need to file the appropriate forms with the IRS to exclude the cancelled debt as income on your 1040 tax return. In addition to filing your 1040 with the IRS you will need to attach a Form 982 to your federal income tax return. By filing-out Form 982 for the IRS you will be letting them know that you are not adding the cancelled debt to your gross income on your tax return and that the debt is excluded from your income due to the filing of a bankruptcy. If you got a 1099-C or 1099-A, so did the IRS. That means you must explain to the IRS why that amount should not be included in your income. If you don’t, the IRS will assume that money counts toward your income and you may either get a smaller tax refund than you expected or, worse: A bill from the IRS.to show that you qualify for an exclusion or exception, you may be able to simply fill out Form 982, claim an exclusion or exception, and be done with it. At the top of the form you’ll see box 1 a. Discharge of indebtedness in a title 11 case. You can check that box. Then on Line 2, you’ll put the amount that was discharged in your bankruptcy for that debt and any others that were reported on a 1099-C. That amount will be excluded from your income. It should be simple enough. Sometimes it’s more complicated than that, though, and you need to work with a tax professional.