Cash Flow Planning for Life - Helping you reach your personal & professional financial goals.

Cash Flow Planning for Life

Helping you reach your personal & professional financial goals.

IRS Form 1099 C

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.

You will also receive a Form 1099-C for any forgiven mortgage debt. The form will tell you the amount of debt that was canceled. You must report all forgiven mortgage debt to the IRS. However, if you fall under one of the exceptions, such as “Insolvency”, then you do not need to pay taxes on this.

In order to take advantage of these exceptions, however, you will need to fill out an IRS form 982 to report canceled debt.

(Oh come on, you know you’re excited!) These forms may not be the most enjoyable thing to think about now, but we promise that you will be excited when you see the money you’re saving on your taxes! IRS Form 1099-A can be found here: www.irs.gov/pub/irs-pdf/f1099c.pdf

If you have further questions about 1099 IRS Forms and how they relate to your income taxes, please contact us online, call (239) 384-9688, or download our FREE eBook 7 Things You Should Know About the Tax Consequences of Debt Forgiveness. When it’s time for us to meet, here is a good way for you to prepare before meeting with your tax planner.

-Mark

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This information is based on facts, assumptions and representations as stated and authorities that are subject to change. We will not update this information for subsequent legislative or administrative changes of future judicial interpretations.

LEGAL NOTICE AND DISCLAIMER: The information within this post is for informational and educational purposes only and is not tax advice and should not be used as such. The facts of each individual situation can have significantly different outcomes when applying tax law. The hiring of a CPA is an important decision not to be based solely on advertisements.

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