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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28082
Experience:  Taxes, Immigration, Labor Relations
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I have my second mortgage charged off they sent me a 1099c. For

Customer Question

Hi
I have my second mortgage charged off they sent me a 1099c.
For 2015. However I still in process of finialzing details on the mortgage end. Originally when the second was transferred and eventually went into collection I made a deal with collectoon agency so I'm not sure if I have to pay income tax. I was in the hamp modification program in the 2009 dowturn.
I'm filing my taxes with turbo tax
And I'm confused on how to fill out the form 1099c on turbo tax
Can you determine if I pay tax on the 75k?what form on turbo tax do I use? What box do I put the discharged amount in?
Submitted: 8 months ago.
Category: Tax
Expert:  Lev replied 8 months ago.
If you borrow money and are legally obligated to repay a fixed or determinable amount at a future date, you have a debt. You may be personally liable for a debt or may own a property that is subject to a debt. After a debt is canceled, the creditor may send you a Form 1099-C , Cancellation of Debt, showing the amount of cancellation of debt and the date of cancellation, among other things.In general, you must report any taxable amount of a canceled debt as ordinary income from the cancellation of debt on Form 1040 line 21,The canceled debt is not taxable, however, if the law specifically allows you to exclude it from gross income.EXCLUSIONS from Gross Income:Debt canceled in a Title 11 bankruptcy caseDebt canceled during insolvencyCancellation of qualified farm indebtednessCancellation of qualified real property business indebtednessCancellation of qualified principal residence indebtednessRefer to Publication 4681 , Canceled Debts, Foreclosures, Repossessions, and Abandonments (for Individuals), for more detailed information regarding taxability of canceled debt, how to report it, and related exceptions and exclusions.If you qualify for the exclusion - you would use form 982 with your tax return and would not include cancelled debt into your taxable income.Let me know if you need any help with reporting.
Customer: replied 8 months ago.
Hi thank you for info. If the debt was initially part of the the hamp is the extension to meet criteria intil end of 2016 or dec 2013?
Expert:  Lev replied 8 months ago.
If you are asking about the cancellation of qualified principal residence indebtedness - that was extended.The extension applies to debt discharged before January 1, 2017 and is retroactive to discharges since the beginning of 2015. Previously it was extended till the end of 2014.If you are asking about Debt canceled during insolvency - that is a permanent provision.

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