Have a Tax Question? Ask a Tax Expert
Good afternoon. A couple of things....but the botXXXXX XXXXXne is that you have no tax liability coming.
First, the 1099-A is simply an informational notice given when you have walked away from a property secured by debt. It is not necessary to include any amounts on the 1099-A on your tax return. Only when you get issued a 1099-C are you obligated to report it on your return. BotXXXXX XXXXXne, you need do nothing with the amounts on 1099-A.
Second, even if you do report it, you owe no tax. Normally, debt forgiveness results in taxable income. But under the Mortgage Forgiveness Debt Relief Act of 2007, taxpayers may exclude debt forgiven on their principal residence if the balance of their loan was $2 million or less. The limit is $1 million for a married person filing a separate return. Details are on Form 982 and its instructions.
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The information given here is not legal advice. As all states have different intricacies in their laws, the information given is general only. This communication does not establish an attorney-client relationship with you. I hope this answer has been helpful to you.