How do we file tax if we get 1099A Form after bankruptcy?

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Rachelle

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Post Posted: Wed Jan 27, 2010 8:52 pm    Post subject: How do we file tax if we get 1099A Form after bankruptcy?
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my husband and were received a bankruptcy discharge September 2008, which included a home loan. They foreclosed on us the following year, per our attorney this is "normal" becuase even though we had no mortgage any longer due to the bankruptcy, they still need to foreclose to take the property back. It was foreclosed on September 2009 and now, Jan 2010 we have received a 1099-A form stating that the balence was 84,516 and the FMV was 50,000 and box #5 states "yes" we are are liable for the repayment of the debt. What does this mean? is this an error? I thought the bankruptcy cleared it all away. How does this affect how I need to do my taxes this year? HELP!!!
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Icon Mini Profile jenkin7
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Post Posted: Wed Jan 27, 2010 11:05 pm    Post subject:
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Hi Rachelle,

What your attorney said is right. Since the mortgage has been discharged through bankruptcy, you are not responsible for it any longer. However, the lender still needs to foreclose the property to satisfy the mortgage lien. If the sales price of the house does not satisfy the mortgage lien, there will be a deficiency. But as you have been discharged from bankruptcy, you do not have to pay it off. You will also not be required to pay any taxes on this discharged debt. The lender sent you the 1099A form because they are required to report the deficiency to you as well as to the IRS.
Rachelle

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Post Posted: Thu Jan 28, 2010 4:23 am    Post subject:
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Thank you for your quick response. However I do have an additional questions after your response, does the 1099-A form affect how I should do my taxes this year? IE: should I go to a CPA (or equivalent) to get my taxes done rather than using TurboTax as I normally do? Do I need to "address" the 1099-A form on my taxes or is it for informational purposes only?
Debsue67

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Post Posted: Fri Jan 29, 2010 10:42 am    Post subject: Form 1099-A questions
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I have the same question having received a 1099A and not knowing if I need to report it, but also wonder if I actually suffered a loss on the involuntary conversion; in other words I owed less than I actually had invested into my home, do I get to claim a loss on the sale?

Thank you!
Icon Mini Profile jerry
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Post Posted: Thu Feb 04, 2010 3:13 am    Post subject:
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Hi Rachelle,

You need to report the forgiven debt amount on your taxes. It is not for informational purposes only. Even though you will not owe any taxes on this forgiven debt, it has to be reported to the IRS. You need to fill out form 982 and attach it to your tax return. If your property was foreclosed and you need to report only the forgiven debt, you do not have to fill out the entire 982 form. You can just fill out lines 1e and 2. If you need a form 982, you can download it from the IRS website at http://www.irs.gov/pub/irs-pdf/f982.pdf .

Hi Debsue,

If you have received a 1099A form, you will have to report the forgiven debt to the IRS through form 982. You may have owed less than what you had invested in the home when you bought it. But how much did you sell the property for? Was the sale price more than what you owed on the property? If it was, then you made a profit from the sale of the home. But if the home was foreclosed or short sold and the sale price was not enough to pay off the mortgage, it will be considered as your lender’s loss. If he forgives the mortgage balance, it will be considered as your taxable income which you need to report to the IRS.

Thanks,

Jerry
Mr G

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Post Posted: Thu Feb 04, 2010 11:27 am    Post subject: 1099-A
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I have recieved a 1099-A from a previous lender. I worked with this lender for a year and gave the house back to them in lue of forclosure. They excepted and sold the house after everything was completed for less than I owed. They sent me a letter disolving me of all debt. Do I have to claim this difference in what they sold it for compared to what I owed as income this year ??
Icon Mini Profile jenkin7
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Post Posted: Thu Feb 04, 2010 10:14 pm    Post subject:
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Hi Mr G,

If your property was sold for less than what you owed and your lender has sent you a 1099A form for the deficiency, you will have to report it to the IRS. However, the 1099A form does not suggest that the lender has forgiven the debt. He can still come after you to collect the deficient amount. The 1099A form simply means that the lender acquired your property and was unable to recover the mortgage in full by selling the house. If the lender cancels this deficient amount, he will send you a 1099C form and if you receive that, you will be subject to pay taxes on the cancelled debt amount.
bucko

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Post Posted: Sun Feb 07, 2010 9:36 am    Post subject: form 1099A chapter 7
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Forgive me... even after reading all the postings. What lines do I fill out on form 982 and what do I put in for response.
Icon Mini Profile savior70





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Post Posted: Fri Feb 12, 2010 2:10 am    Post subject:
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To bucko,

If you received a 1099A form from your lender and the outstanding principal balance was more than the fair market value, you will have to report the difference as your income. You do not have to pay tax on this discharged debt under the Mortgage Forgiveness Debt Relief Act, 2007, provided you used the property as your primary residence. If you are claiming the exclusion from taxes because you used the property as your principal residence, you need to fill out lines 1e and 2 on the form 982. You do not have to fill out the entire form.
HockeyJACK

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Post Posted: Fri Feb 12, 2010 12:36 pm    Post subject: Form 1099-a
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Form 1009-a for 2009

Box 2 192,000
Box 3 209,000
Box 5 is marked YES

What does this have in detail for taxes, I have no idea on how to read this form ?

Please HELP !!
Icon Mini Profile jerry
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Post Posted: Wed Feb 17, 2010 2:17 am    Post subject:
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Hi Jack,

If you defaulted on your mortgage and your lender foreclosed on your property, he will send you a 1099-A form. The box number 2 on this form shows the principal balance owed on the mortgage. The box number 3 shows the amount of interest owed on the loan. What amount does the box number 4 show?

The box 4 shows the fair market value of the property. If the amount listed in box 4 is less than the amount listed in box 2, you will owe the difference. The box 5 states that you are personally liable to repay the difference.

If the lender cancels this difference, you will owe taxes on this cancelled debt. You will be required to report this to the IRS. However, if you used the property as your primary residence, you can avoid paying taxes on this cancelled debt amount. You will have to file a form 982 to claim the exemption from taxes under the Mortgage Forgiveness Debt Relief Act, 2007.

Thanks,

Jerry
Laurie1965

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Post Posted: Sun Feb 21, 2010 5:20 pm    Post subject: Please define primary residence
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Hi I foreclosured on my home in Ca. that I lived in for less than 2 years. I was in an auto accident 2 weeks after signing escrow which was financially devastating. I received a 1099a. Box 2 says $334,464.71. Box 4 says $367,257.03. So would seem I don't owe but I only lived there 1 1/2 years. I also had to file bankrupcty before the foreclosure. Will I owe taxes? I will be seeing a CPA, just not for 2 more weeks. Thanks!
Icon Mini Profile jenkin7
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Post Posted: Tue Feb 23, 2010 12:56 am    Post subject:
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Hi Laurie,

The box number 4 indicates the fair market value of the property, while the box number 2 shows the amount of money you owe. Since the fair market value of your property is more than the outstanding loan amount, you do not have any income from any cancelled debt. Therefore, you do not have to pay any tax for discharge of indebtedness.
tonester

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Post Posted: Mon Mar 22, 2010 2:24 pm    Post subject:
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1099 a 2009 in fl

box 2:182,520.36
box 3: 100.00
box 5 yes

i read alot on this but no where have i seen fmv at 100.00 dollars i dont knwo what to do does a 982 form apply to me the house was my primary residence
Icon Mini Profile savior70





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Post Posted: Tue Mar 23, 2010 10:37 pm    Post subject:
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To tonester,

I've replied to your query at http://www.mortgagefit.com/budgeting-finance/1099a-fmv.html#156495 .

Hope it helps you. However, if you have further queries, feel free to ask the community.
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