Author Topic: 1099 question  (Read 1721 times)

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winstonguy

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1099 question
« on: February 03, 2012 02:53:27 PM »
I just received a 1099 from Cit that was overdraft protection for $1400 and I had just done my taxes.

 Now I am wondering if I am going to start getting 1099s from all my other Citi accounts as well as my other accounts.

Should I wait until I get a bill from the IRS or go ahead and do an amended return? If I wait, will I get penalties etc?

 Also if I start getting 1099s for next year there is no way I can pay all these taxes up front and will they let me pay in installments? Thanks.

Fighting Irish

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Re: 1099 question
« Reply #1 on: February 03, 2012 03:05:58 PM »
You can read any of the numerous other threads about 1099-C.

Basically, though, the forgiveness of debt is balanced by your net worth.

Google "1099c worksheet." There are numerous examples of how the calculations are done, and you can find out if you owe any tax at all.

If you do, though, think about it; do you want to pay the tax, or the tax PLUS penalties PLUS interest?

It's one or the other, isn't it?

Dang it, Jim! I'm a nurse, not an attorney!

(The rest of you, keep that in mind, too.)

rondaben

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Re: 1099 question
« Reply #2 on: February 03, 2012 03:45:31 PM »
I would file the amended return and form 982 if appropriate.  In fact, that ix exactly what I am doing this year.

fish37

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Re: 1099 question
« Reply #3 on: February 03, 2012 03:49:33 PM »
I'm not sure what you mean by getting a bill from the IRS. They aren't going to send you a bill for the amount of taxes owed on the 1099-C. A copy of the 1099-C is sent to the IRS so they can keep track of what should be reported on your taxes. However, you have until April 17th this year to file your amended return, so as long as your amended return is postmarked before then you won't be subject to penalties.

The amount of debt forgiven is going to be added onto your taxable income on your 1040 form and isn't something handled separately and paid tax on separately. It gets lumped in with your regular income from W2's, unemployment, interest income, etc. and then you'll have normal adjustments from deductions and exemption's.

There are also certain circumstances in which you would not have to report the debt forgiven as income. You can check the IRS form 982 to see if any of them apply to you.

MaryB

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Re: 1099 question
« Reply #4 on: February 03, 2012 04:47:25 PM »
I'm not sure what you mean by getting a bill from the IRS. They aren't going to send you a bill for the amount of taxes owed on the 1099-C. A copy of the 1099-C is sent to the IRS so they can keep track of what should be reported on your taxes. However, you have until April 17th this year to file your amended return, so as long as your amended return is postmarked before then you won't be subject to penalties.

The amount of debt forgiven is going to be added onto your taxable income on your 1040 form and isn't something handled separately and paid tax on separately. It gets lumped in with your regular income from W2's, unemployment, interest income, etc. and then you'll have normal adjustments from deductions and exemption's.

There are also certain circumstances in which you would not have to report the debt forgiven as income. You can check the IRS form 982 to see if any of them apply to you.


What happens if you receive a 1099, and file joint with a spouse, the accounts were in your name only and you have no income to report, only your spouse has income?
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CASES:
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fish37

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Re: 1099 question
« Reply #5 on: February 03, 2012 07:25:33 PM »
When you are filing jointly for tax purposes, your income gets added together. So when you sit down with your tax preparer or if you do them youself, you enter in your spouses wage information and then your 1099-C "income". After that, you'll get your standard (or itemized) deduction for being married and then exemptions for the two of you and any dependents if you have them. The amout of debt forgiven is usually not enough to make a significant difference for tax purposes.

Any other questions, you can PM me.

Fighting Irish

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Re: 1099 question
« Reply #6 on: February 03, 2012 08:21:17 PM »
I'm not sure what you mean by getting a bill from the IRS. They aren't going to send you a bill for the amount of taxes owed on the 1099-C. A copy of the 1099-C is sent to the IRS so they can keep track of what should be reported on your taxes. However, you have until April 17th this year to file your amended return, so as long as your amended return is postmarked before then you won't be subject to penalties.

The amount of debt forgiven is going to be added onto your taxable income on your 1040 form and isn't something handled separately and paid tax on separately. It gets lumped in with your regular income from W2's, unemployment, interest income, etc. and then you'll have normal adjustments from deductions and exemption's.

There are also certain circumstances in which you would not have to report the debt forgiven as income. You can check the IRS form 982 to see if any of them apply to you.

It's only taxable, insofar as it raises the net worth above 0. If the taxpayer has more debt, before the debt is forgiven, than assets as defined by the government, the net worth is still less than 0, and there is no tax assessed.
Dang it, Jim! I'm a nurse, not an attorney!

(The rest of you, keep that in mind, too.)

Flyingifr

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Re: 1099 question
« Reply #7 on: February 04, 2012 01:05:49 AM »
You have until April 15 to file the amended return without penalties. Obviously you will be including Form 982 with the Amended return.
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fish37

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Re: 1099 question
« Reply #8 on: February 05, 2012 02:41:01 PM »
Most years the deadline is April 15th, but this year the 15th falls on a Sunday and Monday is a D.C. holiday, so this year you get an extra two days :)  For some people, a couple days makes a huge difference.

 

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