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Another question from a client…

 

“Why did I get a 1099c and what do I do with this, I thought I was all finished with this crappy company?!?”

 

Yuk, it’s like the final “screw YOU” from an old creditor or collector.

 

If you don’t do anything, it’s likely gonna cost you something… Do nothing and the IRS may send you a bill with interest and penalties (possibly YEARS from now). So, by all means read this post and do a little something to prevent that last “finger in the air” from actually hurting you.

 

Why did I get this?

You may have settled a debt with them and the amount on the 1099c is the amount they discounted from the original debt… if you did not settle it, then they likely wrote off the entire balance (as  it was in the 6th  or 7th year of delinquency) and thus sent that 1099c (forgiveness of debt). You must report that on your taxes as income but may not be required to pay taxes on it under certain circumstances.

If you qualify, (check with a tax professional) you could use the Insolvency option to not have to report that money as income and therefore would not have to pay taxes on it.

 

Please read the following two links

http://www.irs.gov/taxtopics/tc431.html

http://www.irs.gov/pub/irs-pdf/f982.pdf

 

If you just can’t get through that, please contact an IRS support line or your tax professional for help.

 

As always,

To your Health, Wealth and Liberty

Mark Ruiz

 

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