Tax filing inclusions?

[kriskumarr]

Hi,

Thanks to all out here for support and information.

Filed in Nov 09 and got my discharge last week.

What are the tax implications?

Do I need to report it on my tax returns this year on next year?

If the discharge was for $50K is there anything I will be taxed for?

Thanks,

[BCA2009]

Nothing to report for 2009. The imputed income is the result of the discharge and should be reported on the 2010 tax return. You will complete form 982 next year and you won't owe any taxes on it.

[kriskumarr]

Great , as always appreciate it!

[tightrope]

Nothing to report for 2009. The imputed income is the result of the discharge and should be reported on the 2010 tax return. You will complete form 982 next year and you won't owe any taxes on it.

Since when do BK discharges get a 1099?

(I thought) One of the advantages of filing BK vs settling is that one does not get a 1099.

[BCA2009]

Federal tax law states that any forgiven debt is considered income. It then provides exclusions for several situations. Bankruptcy is one of the them. So technically you should complete form 982, whether or not you got a 1099. Although most people don't unless they do get a 1099. A bank might or might not send 1099's after BK, but thet are required to for almost all debt forgivnes situations, so they just send them out to cover their own rear end and let the tax payer handle it their tax return.

[kriskumarr]

Hello,

ok, so I need to report it but will not be taxed ?

[bktmom28]

I would read some of the other posts on this. There are several who say that you don't need to report it. You could always call a tax pro and ask them. We didn't receive anything from any of our creditors.

[BCA2009]

I would read some of the other posts on this. There are several who say that you don't need to report it. You could always call a tax pro and ask them. We didn't receive anything from any of our creditors.

If you get a 1099C you need to report it on form 982. If you don't there is a very good chance you will get a letter from the IRS in about 18 months saving you owe them more money.

Completing form 982, takes about 2 minutes and you are done.

[BCA2009]

Hello,

ok, so I need to report it but will not be taxed ?

correct!

[tightrope]

Federal tax law states that any forgiven debt is considered income. It then provides exclusions for several situations. Bankruptcy is one of the them. So technically you should complete form 982, whether or not you got a 1099. Although most people don't unless they do get a 1099. A bank might or might not send 1099's after BK, but thet are required to for almost all debt forgivnes situations, so they just send them out to cover their own rear end and let the tax payer handle it their tax return.

One of the advantages of filing for bankruptcy vs settling is that cancellation of debt through BK is specifically exempted and is not considered taxable income.

Correction... although the BK discharged debt is not considered taxable income, you may want to complete form 982 to show that your debt was cancelled in a BK, as BCA2009 pointed out. (see IRS Publication 4681)