- This topic has 15 replies, 4 voices, and was last updated 5 years ago by .
-
-
Friday we got a 1099-c letter from the irs. It was for a $7,000.00 debt from 2 years ago. We didn’t get anything for that money. We bought a van, one month later it died, they reposessed it and that was it. Now because they canceled the debt they send us the letter that we are being taxed on that 7 grand to the amount of 3,400.00. I’ve done some research and I”m positive we will be able to claim insolvent for that period so this will be a nothing, but. 1) It said on the letter, “this is not a bill”. 2) It also said not to do an amended return- why would we not do an amended return? Are we supposed to take this on the chin? 3) Are they going to take that 3,4000.00 from this years tax refund? :(
-
Replies
-
-
-
-
It takes forever for the balance to be assessed if you ignore the letter. My experience 6-15 months after that letter. If you plan on claiming insolvency do not sign the form. File an amended return and mail it to that address in the left corner of the notice along with a copy of that notice. As long as you really were insolvent and there was nothing else missing on that year you won’t owe. If you google insolvency form you fill out that chart. It’s your income and assets in the year it was cancelled. The IRS may ask you for that to be filled out while the amended is processing.
-
-
No they won’t take the refund because it’s a proposed balance not assessed yet.
-
Sorry did read the rest, the notice you got is a CP2000 or a notice of deficiency. You definitely can amend the return and claim insolvency. Good luck let me know if you have questions
-
It’s considered income and you have to declare it on your return, even if it was charged off. If you did not have assets or income to pay that debt in the year it was discharged. You can claim insolvency on your return which then makes the income non taxable.
-
-
Btw @Janewd, you’re welcome. I do hope the outcome is favorable.
Have a good night.
-
I want to say don’t be too hard of DH, Men (some), omit, to spare us! I get it, but in situations like these, 2 heads are better than 1.
-
-
-
Or, @Janewd, a Tax Advocate.
Sounds horrible!
I’m not sure why the IRS doesn’t attempt to resolve these issues before tax season. It’s not like they only work 4 months a yr. More people would prefer a payment plan, or resolve to keep their refund from being intercepted.
I had a debt. It was resolved early on in that yr. Now, payments for dept comes out of my return. About $2, 300 every season! I would be livid if I were about to lose MY tax money.
Hope you get it sorted,
All the best to ya .. -
-
What I would do If I were you is go to a tax professional tomorrow, take the notice with you and ask them. Stay the hell away from HR BLOCK they’re useless af!!
But you need a real professional opinion and not one from a message forum.
Good luck to you!
-
- The forum ‘2020 Tax Season’ is closed to new topics and replies.