Bankruptcy can clear some types of tax debt. It will not clear a federal tax lien that has attached to your assets. However, when no tax lien has been filed, income tax debt can be discharged and cleared from your record if some very specific requirements are met in either a Chapter 7 or a [...]
Kent Anderson, Oregon Bankruptcy Attorney
If your home is foreclosed, sold at a short sale, or if you give the home back to your lender in satisfaction of your debt, IRS Tax Fact 10 tells us to watch for a 1099-C or 1099-A statement in the mail during the next calendar year. Lenders are required to send the 1099 forms [...]
Most home lenders, banks and government agencies are required to notify you and the IRS if they cancel all or a part of your debt. This is done by the issuance of Form 1099-C or, at times, Form 1099-A. By law, these forms must show the amount of debt forgiven and the fair market value [...]
As you know from the previous “Tax Facts”, when mortgage debt is forgiven, it can be excluded from income if it is qualified principle residence debt, and you know that a qualified principal residence must be the main home of the taxpayer. What happens to mortgage debt that is cancelled on a second home, rental [...]
The IRS wants you to know, in Tax Fact 7, that you must use Form 982 in order to claim that forgiven mortgage debt should not be included in your income for tax purposes. IRS Form 982, entitled “Reduction of Tax Attributes Due to Discharge of Indebtedness” must be attached to your federal income tax [...]
In explaining tax on mortgage debt forgiveness, the IRS stresses, as tax fact number 6, that proceeds of refinance debt used for purposes, other than buying, building, or making a substantial improvement in the principle residence, do not qualify for exclusion from income if the debt is cancelled. This can be important. Many lenders require [...]
