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tressa_burns
Joined: 17 Dec 2008
tressa_burns's page
Posts: 3
120 Magic Points
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Subject: i owe 6,550 should i put in like 600$ to see what they say
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Thu Dec 18, 2008 12:12 am
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| in one question on this form it states settlement in full: accept_______ should i put a amount there then it says discharge of indebtedness of 600$ or more requires filing with the IRS form 1099c |
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fireyone
Joined: 26 Feb 2008
fireyone's page
Posts: 4500
8812 Magic Points
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Thu Dec 18, 2008 12:25 am
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| I am not entirely sure of this one since I have never filled one of these out. Do not put anything until someone comes on here and answers you question. I do know that if they write the debt off they will some times report it to the IRS and you will have to pay taxes on it because if you do not pay the debt then it is considered an income. Do not be surprised if you have to pay taxes on it. |
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anthony
Joined: 31 Jul 2006
anthony's page
Posts: 550
13573 Magic Points
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Thu Dec 18, 2008 10:42 am
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Hi Tressa
As far as I know, IRS 1099c form is filed when there is foreclosure on your property and you do not pay a part of the outstanding debt amount. When your property is sold by the mortgage lenders due to foreclosure, they may not get the full value of the outstanding debt by selling the property and so they have to sell it incurring a loss. Therefore the borrower still owes some money to the creditor which the lender may write off. In such cases you need to pay the tax on the amount which you did not repay. For this you need to file IRS form 1099c. Generally if your debt has been forgiven by your creditor for $600 and above, the creditor must provide you with this form.
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Anthony Marx
A positive attitude is not achieved by turning a blind eye to the negative, but rather by responding to every situation in the most positive way possible. |
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Mary
Joined: 06 Jul 2006
Mary's page
Posts: 730
17417 Magic Points
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Thu Dec 18, 2008 11:40 am
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Yes, since your exempted debt amount has been over 600$, you need to fill up the 1099c form. Now in the form 1099c, I cannot find anything like "settlement in full" as you said. Are you taking about any other form or you faced the problem with the 1099c form. If it is any other form you are talking about, you need to put the outstanding debt amount ie $6550 and not $600.
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Where there's a will, there's a way !! |
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fireyone
Joined: 26 Feb 2008
fireyone's page
Posts: 4500
8812 Magic Points
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Thu Dec 18, 2008 11:48 am
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| Now I do believe that you will be responsible for the taxes on the amount you list. If it is $6550, the amount of the debt, then you will more than likely be responsible for the taxes on this amount. They look at this as a type of income if you do nopt pay the debt. Thats roughly $393. |
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carol
Joined: 27 Jun 2006
carol's page
Posts: 1362
Location: Los Angeles, California
29592 Magic Points
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Sat Dec 20, 2008 6:32 am
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Hi tressa_burns
Is your property under foreclosure? If it is under foreclosure and you cannot pay off the difference in the amount that you owe and the amount at which your property has been sold off by the creditor, you need to file form 1099c and you need to pay tax on this difference in amount.
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fireyone
Joined: 26 Feb 2008
fireyone's page
Posts: 4500
8812 Magic Points
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Sat Dec 20, 2008 8:34 pm
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| So what is the taxes paid on the settlemnt amount or the full amount owed? Unless I am missing it I do not see anything about the property foreclosure. Can you explain how this is? |
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Justin
Joined: 17 Jul 2006
Justin's page
Posts: 1298
28935 Magic Points
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Mon Dec 22, 2008 8:56 am
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| The tax is on the outstanding debt i.e, the difference in the price your property has been sold and your outstanding debt on the mortgage. The tax is neither on the settlement amount, nor on the full amount, but on the amount which you do not pay back to the creditor. Moreover, you need to file 1099c only if the amount which you fail to pay back exceed $600. |
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fireyone
Joined: 26 Feb 2008
fireyone's page
Posts: 4500
8812 Magic Points
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Tue Dec 23, 2008 10:53 pm
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| Thanks for expalining. I understand now. If you owe under 600..no form then right? |
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