How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask emc011075 Your Own Question
emc011075
emc011075, Tax adviser
Category: Tax
Satisfied Customers: 2855
Experience:  IRS licensed Enrolled Agent and tax instructor
62958156
Type Your Tax Question Here...
emc011075 is online now
A new question is answered every 9 seconds

ON JULY 9, 2016 A CREDITOR HAS FILED A 1099 WITH IRS. THE

Customer Question

ON JULY 9, 2016 A CREDITOR HAS FILED A 1099 WITH IRS. THE DEBT WAS FROM 2005 AND THEY HAVE SENT IRS A 1099 DATED 12/31/14. MY 2014 WAS FILED ON TIME. IS THERE A STATUTE ON THIS DEBT?
JA: The Accountant will know how to help. Is there anything else the Accountant should be aware of?
Customer: NO
Submitted: 9 months ago.
Category: Tax
Expert:  emc011075 replied 9 months ago.

Hi. My name is ***** ***** I will be happy to help you.

There are two separate issue. One is your actual debt and the second is the cancellation of the debt. The creditors have certain number of year to try to collect from you. The statute depends on type of debt and your state regulations. It is usually around 10 years.

When the creditor issue 1099C, it creates another issue and another statute of limitation. The canceled debt is treated as income for tax purposes. The IRS has now 10 years from assessing additional taxes to collect. The IRS also has 3 years from the due date of the return to do the assessment. Because the debt was canceled in 2014, it is still within 3 year statute of limitation for the IRS to review your return.

If you could claim insolvency (your total asset was less than your total debt at or around the time 1099C was issued), you can amend your return exclude the additional income. You can always amend your return and claim the additional income, and deductions instead of letting the IRS recalculate the return for your.

Customer: replied 9 months ago.
THANK YOU, ***** ***** I was insolvant at the time and will proceed with that response to the IRS
Expert:  emc011075 replied 9 months ago.

If you were insolvent than include 982 form with your respond. This should be enough.

And if this answered your question, please take a moment to rate my response so that I may receive credit for assisting you today. You find the rating bar on the top of the page – 5 stars. However, if you need clarification, or want to discuss this issue further, let me know. Thank you.