Taxpayer asks:
Hello, Taxgirl Hope you are doing well! I have a Question I got a 1099-c form from wells fargo for about 5000 will this be alot of added taxes for me and my wife we made about 71000 last year we have 1- 4 year old. I am scared to file my taxes! ugh what do you think? thanks
Taxgirl says:
Don’t be scared, it’s not that bad. In your tax bracket, for married filing jointly, that reportable income is going to be taxed at about 25%. Expect to pay an additional $1250 in tax for the 1099-C – not great but not horrible.
If there are special circumstances, such as insolvency, you may qualify for an exception. If you’re not sure, consult with your tax pro.
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
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{ 4 comments… read them below or add one }
We seem to be getting more of the 1099-C’s this year – at least as compared to last year and considering it is early in the season. Everyone we have seen so far has been excluded due to insolvency. One for bankruptcy. The insolvency, I think, is going to work wonders for the exclusion because of the decline in market value of homes. Just about everyone I know that has a mortgage of any size is upside down on their house now. And for those who have purchased new cars in the last year or so the insolvency is even greater. I considered trading my car a few weeks ago as the incentives are pretty good. The salesman was nice enough to tell me that although the incentives were good they would not make up for the beating I would take on the trade in price. No, none, nada, zip market for used Jags and as a result no trade in value. So I guess if I owed anything on the dumb car I would be upside down on it as the market value is practically non-existent. And speaking of insolvency – we have added a bankruptcy attorney to our phone list……that’s how many questions we have received regarding bankruptcy so far this year. But now that the stimulus package has passed consumers will immediately go out and spend their extra $10 a week and the economy will rebound pretty quickly – What? You mean it might not? But how can this be so? I have the word of the best politicians money can buy that this stimulus package is the answer to all things for all people.
Skip, I don’t doubt it. I’m receiving a lot of questions about forms 1099-C.
just to add to my 1099-c problem i called my lender today and asked them why i recived this 1099-c from on feb 27 2009 when i should have recived it by jan 31 2009 they had no answer. i also asked why i was got a 1099-c when there was nothing in my agreement that said i would be liable. they said it didnt matter that all losses are reported. but i must note that this bank was recently given BAILOUT BY THE GOVERMENT for mortage losses. i asked them why are they double dipping from tax payers because they are putting my home vaule loss as their loss and getting money from the irs and on top of that also getting bailout money for the same thing,. the rep transferd me to a supervisor who said the bank had no comment on my question. so my thing is im getting a 1009-c for 97,000 i did not use one penny for my own gain. and they want to charge 97,000 income i never made or saw a penny of so some rich ceo banker can get his multi million dollar bonus. thats not right.
hey tax girl I file my own returns every year but this year like has not been like any other. I got into a mess because of an arm loan on my mortgage. but I got out of it with a great loan modification . I’m in newyork I paid 389,000 for my home 4 years ago. the house value dropped below 280,000 I almost went into foreclosure cause my payment was going up because of the arm and I couldn’t afford it. I requested a loan mod they saw the situation and they decided 2 reduce my loan to 291,000. now nowhere in the new agreement that I singed did it say I was responsible for the 97,187 that they took off the principal it simply said my new debt was 291,000 no strings attached. now I’m receiving a 1099-c form that its a cancellation of debt for the amount of 97,187 what do I do I’m scared I have no money to pay the IRS. I could barely afford to keep the house but I do it because I have wife and disabled child . and we need this home but somehow I feel like the mortgage company is trying 2 stick it to me with this 1099-c . can you give me some advise I don’t know what to do. thks.
just to add to my 1099-c problem I called my lender today and asked them why I received this 1099-c from on Feb 27 2009 when I should have received it by Jan 31 2009 they had no answer. I also asked why I was got a 1099-c when there was nothing in my agreement that said I would be liable. they said it didn’t matter that all losses are reported. but I must note that this bank was recently given BAILOUT BY THE GOVERMENT for mortgage losses. I asked them why are they double dipping from tax payers because they are putting my home value loss as their loss and getting money from the IRS and on top of that also getting bailout money for the same thing,. the rep transferred me to a supervisor who said the bank had no comment on my question. so my thing is I’m getting a 1009-c for 97,000 I did not use one penny for my own gain. and they want to charge 97,000 income I never made or saw a penny of so some rich CEO banker can gets his multi million dollar bonus. that’s not right.