wipedout

1099-C and Insolvency Worksheet

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I'm hoping to be able to settle some debt this year, and have been reading up on how to fill out the Insolvency Worksheet. I've always done my own taxes, but will probably get an accountant to do them next year, but I'm trying to prepare myself.

My main question is about including my spouse's debts/assets, if I am the only one 1099'd? The other question is about 401k. No matter how much I've read, I'm still confused...do I put the value that I can get a loan from it (50%)? The full value the day before the debt settlement? It is confusing, because the full amount isn't available to me, unless I quit my job or get fired, then I can liquidate it, and receive about 65% of it after taxes and penalties. From what I've read, this seems to be an unclear area.

If I have to include my spouse's assets/debts (i.e. a jet ski in her name only, her 401k, etc), it will be really close to screwing me over. If I only have to list my personal assets/debts, including joint assets/debts (i.e. upside down mortgage), I should be good. If I am an "authorized user" on one of her credit cards, can I list that as one of my debts? That particular card would help me :) Oh, also, we file joint returns, if that matters.

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Hopefully one of the tax experts will jump in here, but its my understanding Pub 982 is based on "household" income and assets, so, particurly if you file joint returns, you're probably screwed.

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When I received my 1099-C this year, my tax person told me to show that I was insolvent the year the 1099-C was issued for. I was not married to my current wife at the time it took place in 2008, but she told me to file married with her information.

We also had to show her income etc., but also pointed out that she was not part of the action the 1099-C was filed on. Cost me a hundred fifty to have the paper work and taxes filled out.

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http://www.irs.gov/pub/irs-pdf/p4681.pdf

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I'm hoping to be able to settle some debt this year, and have been reading up on how to fill out the Insolvency Worksheet. I've always done my own taxes, but will probably get an accountant to do them next year, but I'm trying to prepare myself.

My main question is about including my spouse's debts/assets, if I am the only one 1099'd? The other question is about 401k. No matter how much I've read, I'm still confused...do I put the value that I can get a loan from it (50%)? The full value the day before the debt settlement? It is confusing, because the full amount isn't available to me, unless I quit my job or get fired, then I can liquidate it, and receive about 65% of it after taxes and penalties. From what I've read, this seems to be an unclear area.

If I have to include my spouse's assets/debts (i.e. a jet ski in her name only, her 401k, etc), it will be really close to screwing me over. If I only have to list my personal assets/debts, including joint assets/debts (i.e. upside down mortgage), I should be good. If I am an "authorized user" on one of her credit cards, can I list that as one of my debts? That particular card would help me :) Oh, also, we file joint returns, if that matters.

when dealing with irs is very important to know the date of last payment meaning the first they the account whent delincuent if 36 months pass by your might be off the hook of 1099c read portfolio recovery and 1099 c case if you choose to dispute this in us tax court once the irs wants to collect from you read on the internet us tax court made it clear if 36 month had pass by since last payment is clear you are not going to pay. if you did not work as much and the amount of 1099c is not that big probably you do not have to pay as much taxes as you think your tax professional can tell you how much if you have to pay some times the amount is not that big to make an effort to fight it. some people just pay it and get it over with. the decision is yours

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if yor are filling out the irs insolvency work sheet may i ask why...? US tax court or 2008 Tax return 1040x amended return...? or as a requested by irs...?

Edited by soyelmismotony

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if yor are filling out the irs insolvency work sheet may i ask why...? US tax court or 2008 Tax return 1040x amended return...? or as a requested by irs...?

I'm not filling one out now, was just plugging in some numbers to see how close I'm going to be if I end up settling some bad debts. I haven't received any 1099's yet, since I haven't settled anything yet. Was just curious how I might be able to move the numbers around. Worse case scenario, it's gonna be real close. Best case scenario, I'll be exempt from paying taxes on all of the potential CODI.

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ALL of your 401k is counted as well as any surrender value of life insurance.

If you are filing jointly, then her assets and debts go on there too.

I used Turbo Tax for 3 1099s. Was insolvent on the first 2 but not the last.

You have to manually add the Form 982 and worksheet on the TT software. Dont forget the worksheet, they will come looking for it if you forget.

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