Question about forgiven Debt and the IRS Please read the whole thing?
My Husband and I had a vehicle reposession a few yrs ago after I lost my job. We made a settlement agreement and paid it a few months ago. We got letters from the Auto Loan company stating this: "Enclosed you will find an Internal Revenue Service Form 1099-C. A copy of the form has also been provided to the IRS. The amount reflected in the form is the amount of unpaid principal on your GM Financial account that is deemed uncollectible, either because we've discontinued significnt collection activity on the account under IRS definitions or because we've entered into a settlement agreement with you. We are sending this form as a requirement of IRS regulations. The unpaid principal, once it is deemed uncollectible, is considered income to you by the IRS pursuant to the regulations. Sincerely, GM Finanacial" I have a few questions about this. One, My Husband already filed his taxes (We just got these letters today) so what do we do now? Secondly, I did not work this year, does this mean I have to go file taxes now? And Third, Why is forgiven debt considered income? Do we get money back or something? Im confused. If it matters, the amount of the principal that has been forgiven is $10,000 and We paid $10,000.00 for the settlement agreement.
Asked By: amy - 1/31/2013
Best Answer - Chosen by Asker
You should have filed jointly, which is usually more beneficial than filing separately. You can do that by filing an amended return, which you should do anyway due to the 1099-C. However, you may not have to pay any tax on it. If you can show you were considered insolvent (meaning that your debts exceeded your assets... More
Answered By: John Scott - 1/31/2013
Additional Answers (3)
Then you and your husband will file a joint 1040X, an amended tax return The IRS has determined that forgiven debt is in fact income since you did not pay the amount owed. You have no basis to appeal that IRS ruling
Answered By: Ariaread - 1/31/2013
They consider the forgiven debt income because it is basically money that was given to you- they forgave half of your debt ($10,000). You will owe taxes on that amount... More
Answered By: StayAtHomeMomOnTheGo - 1/31/2013
>My Husband already filed his taxes (We just got these letters today) so what do we do now... More
Answered By: Vinncent - 1/31/2013
$21/hr Start, Avg Pay $72K/yr No Experience Needed! Get Started.
New job opportunities added daily. Search & apply for DC jobs now.
Click. Search. Apply. Free!
Shopping for Jobs Today? Find the One That's Right for You!
Other Career Questions
What jobs are there in the business field that are night jobs? Places and job titles please. Im have a BA in Business Admin and looking for a night job, already have a morning/day job.
Enumerate these jobs Say, patent application writting. patent application writing. In a company, what jobs are needed to keep confidential?
Content is not owned or controlled by Monster. Any content concerns should be addressed with Yahoo!
Yahoo! Does not evaluate or guarantee the accuracy of any Yahoo! Answers content. Yahoo! Disclaimer.
Best-Paying Work-from-Home Jobs
It’s easier than ever to work from home. Of course, not every job is a mobile job, and some companies aren’t interested in having their employees work from home.
2013 Marketing Jobs Outlook
The US may be facing another year of anemic hiring overall, but that won't be the case in the high-orbit world of multichannel, digital media marketing.
2013 Engineering Jobs Outlook
Engineers will find job opportunities in select disciplines in 2013, with candidates who are all-around, client-oriented businesspeople in demand.
Best-Paying Jobs by Major
What could you earn with a particular four-year degree? Find out by checking out this list of the top-paying jobs for 20 of the most common majors.
Eight High-Paying, Secure Jobs
Want to earn a good salary and enjoy a measure of job security as well? Check out these well-paying jobs on tap for fast growth in the coming years.