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Form 982 to Avail of Reduced Taxable Income on Forgiven Debt

If you have any financial obligation that was partly or entirely forgiven, you must file Form 982 to report “discharge of indebtedness.” In most cases, the amount you have obtained as forgiven debt is included in your gross income and is, therefore, taxable. Under certain circumstances as described in IRS Code Section 108, you are allowed to exclude the discharged debt by filing Form 982 together with your income tax return. With this form, exemptions can be availed so you don’t have to pay taxes on the cancelled debt. Common exclusions include bankruptcy, insolvency, non-recourse loans and indebtedness due to real property losses. When an individual qualifies for debt forgiveness, the lender will send form 1099-C also called Cancellation of Debt. The forgiven amount appears on this form in box number … Read entire article »

Filed under: Bankruptcy Help, Debt Relief, Featured Articles, Insolvency

Basics of Cancellation of Debt Income

Cancellation of debt income may be defined as the amount of debt forgiven by a creditor without requiring any considerations in return. The amount of debt forgiven by the cancellation of debt by a creditor might be considered as income to the debtor and hence would have to be reported as part of the individual’s gross income. Usually, such income might fall under the tax purview and may be taken up as ordinary income to the taxpayer. Hence the amount would be known as cancellation of debt income or CODI. If the cancellation of debt income might be taxable, then the debtor would be given a Form 1099-C at the financial year end where in the amount of the forgiven debt would be shown as taxable income. For example, if … Read entire article »

Filed under: Bankruptcy Help, Insolvency

File Bankruptcy On Taxes

Many people incorrectly assume that they cannot file bankruptcy on taxes. This notion may stem from the prevailing belief in the United States ever since Benjamin Franklin uttered the famous quote: “In this world nothing can be said to be certain, except death and taxes.” Liability for income taxes is often a very stressful issue, especially for business owners. Employees usually have their taxes taken out of the paychecks each pay period, so they are prepaid come April 15th. But when it comes business owners, they pay themselves and usually do not set aside the necessary savings to cover their anticipated liability. So tax time rolls around and they stress about how they will meet their obligations to Uncle Sam. The good news, for many people, is that if you have gotten … Read entire article »

Filed under: Bankruptcy Law, Insolvency

IRS Insolvency Worksheet

Keeping a record of one’s total liabilities and assets in the IRS insolvency worksheet is important in proving that insolvency exists prior to cancellation of debt in one’s income. Debt Insolvency offers a complete guide on how to deal with insolvency and bankruptcy problems through well researched information and helpful links regularly updated for the user’s benefit. Cancelled debt is considered an income when a liability is forgiven. This is usually added as miscellaneous income on a person’s tax return and is therefore taxable. There are ways to exclude forgiven debt from taxable income and one measure involves discharging the liability in a bankruptcy. A person can qualify for exclusion of forgiven debt as income by proving an insolvency status before the cancellation of debt. An insolvency worksheet IRS needs to be … Read entire article »

Filed under: Bankruptcy Help, Foreclosure Help, Insolvency

Form 982 Short Sale

A lot of people nowadays are being sent 1099-C to settle individual debts or debt consolidation. Upon receiving this form, make sure qualification is adequate in case one applies for IRS Form 982 to reduce the taxable income from cancelled debt. Checking box 1a means a discharge of indebtedness. The amount discharged for bankruptcy is recorded on line 2a and should only be listed on line 10a if one likes to retain non-depreciable assets and if the amount is above the remaining debt after the bankruptcy discharge. One other circumstance that the debtor can be charged by the taxman is if form 982 short sale conditions were not met. A short sale occurs when an excess exists on the amount the debtor owes the creditor upon filing for bankruptcy. The excess … Read entire article »

Filed under: Bankruptcy Help, Foreclosure Help, Insolvency

New Directive to IRS Tax Debt

Article by Ask Bill IRS tax debt could be described as the amount of money owed by a taxpayer to the Internal Revenue Service in the form of back taxes, filing of returns and other penalties levied by the IRS. Now, this is what David Green did not know. He was under the impression that if he did not file his tax returns for one year, then he would not be penalized. He also was of the opinion that since his mortgage debt was cancelled and since he did not earn any additional income because of the cancellation, he would not have to pay any taxes. Hence he ignored the Form 1099C which his creditor had issued at the time of Cancellation. David felt like he was hit by a bolt … Read entire article »

Filed under: Bankruptcy Help, Insolvency

Can I Stop My House Foreclosure if I File Bankruptcy?

Article by Lisa Jones Real estate has been steadily declining since 2007 from their previous highs. Anyone who bought a house in or before the year 2000 should be okay. However, this is dependent upon the fact of them taking equity out or if they refinanced their houses. If these homeowners do not have a steady job, they could be in for a hard time. Some of them had subprime loans to grab their property’s equity to use it for buying an expensive car or boat. The prices have dropped so drastically now that these people are underwater with their mortgages and they owe more on the house than it would sell for. Today, a lot of these loans are becoming due and many people are beginning to panic, trying to … Read entire article »

Filed under: Bankruptcy Help, Foreclosure Help, Foreclosure Law, Insolvency

Debt Settlement and the IRS – How to Figure Out If You’re Insolvent at the Time of Pay Out

When any financial institution settles a portion of your debt, then they issue a 1099-C. This 1099-C reflects the amount that has been settled. The IRS will consider the amount mentioned in 1099-C as taxable. This tax can only be avoided if you can prove insolvency at the time of settlement. In order to do this you will have to follow a few steps. First you must compile all your 1099-C and get the total amount that has been settled or cancelled by your creditors. Let’s say you had a debt of $ 10,000 and creditors settled it for $ 5000. At the time of settlement your creditor will issue a 1099-C with $ 5000 mentioned on it. As per rules, any settlement amount above $ 600 has to be informed … Read entire article »

Filed under: Bankruptcy Help, Insolvency

Roughly how much does it cost for a consultation by an attorney to decide if you should declare bankruptcy?

I called one for a quote and he said it would cost $250 for a one hour consultation. Does that seem too much? … Read entire article »

Filed under: Bankruptcy Info, Bankruptcy Law

Tenant Bankruptcy can Stop Eviction

Alan J. Goldberg, Esq. discusses how tenant can stop eviction by filing bankruptcy. … Read entire article »

Filed under: Bankruptcy Law

Is it absolutely necessary to have an attorney to file bankruptcy?

Filed under: Bankruptcy Law

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