Cash Flow Planning for Life

This is the sixth tip in our series 7 Things You Should Know About the Tax Consequences of Debt Forgiveness which is also available as a free eBook from your Naples Accounting Firm.

If your home has been foreclosed on by the bank, you will typically receive another one of the 1099 IRS Forms. This one is IRS Form 1099- A and it will come from your lender. This will contain several components of relevant information. You will need the information on Form 1099-A to report the foreclosure properly on your tax return.

Here is some important information to know about a foreclosure as it relates to your taxes:

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This is the fifth tip in our series 7 Things You Should Know About the Tax Consequences of Debt Forgiveness which is also available as a free eBook from your Fort Myers Accounting Firm.

The 1099 IRS Forms are used by various entities to report income that they have perceived you have earned.

For example: A bank issues you a credit card. You charge $1,000 and never make payments. After some time, the bank will issue a Form 1099-C to you. They are also reporting the $1,000 as income you have earned, to the IRS.

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This is the fourth tip in our series 7 Things You Should Know About the Tax Consequences of Debt Forgiveness which is also available as a free eBook from your Naples Accounting Firm.

IRS Form 982 generally says that “the amount by which you benefit from the discharge of indebtedness is included in your gross income. However, under certain circumstances described in section 108, you may exclude the amount of discharged indebtedness from your gross income.” The specific instructions are contained in section 108 of the Internal Revenue Code.

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This is the third tip in our series 7 Things You Should Know About the Tax Consequences of Debt Forgiveness which is also available as a free eBook from your Fort Myers Accounting Firm.

The Emergency Economic Stabilization Act of 2008, is most commonly referred to as “the bailout” of the U.S. financial system. As most people are aware, it provided up to $700 billion to the Secretary of the Treasury to buy mortgages and other assets that were clogging the balance sheets of financial institutions and making it difficult for working families, small businesses, and other companies to access credit.

However, there were other components of this Act that you, as a taxpayer, should be aware of. Basically, the Emergency Economic Stabilization Act of 2008 focused on these 3 components:

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This is the second tip in our series 7 Things You Should Know About the Tax Consequences of Debt Forgiveness which is also available as a free eBook from your Naples Accounting Firm.

A foreclosure or short sale of your home can be a double edged sword. Not only do you lose your home, but then you may have to pay taxes on the forgiven debt amount. Talk about ‘beating a dead horse’ right?

In recent years, with the rise of short-sales and foreclosures, the Mortgage Debt Relief Act of 2007 was passed to help homeowners who have found themselves in this predicament.

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