AMEX offered me 10%!

[OHBOY]

True, but if she was insolvent (and no doubt she was) when the debt was forgiven, the IRS doesn't count the forgiven debt as taxable.

I am kinda stumbling over the 'no doubt she was...' part (though I admit I don't know this particular OP's background/finances...)

I tried to figure out if I am insolvent..., here are the numbers:

90K Home value
113K Mortgage
48K Credit Card Debt
110K IRA

The way I understand it, because the IRS does not exempt the IRA's, I would NOT be 'insolvent'.

I added the Debt: 113K Mortgage + 48K CC=161K
I added the Assets: 90K Home Value + 110K IRA = 200K

By IRS standards I am therefore 'SOLVENT'...outch !

PLEASE, ... SOMEBODY, TELL ME I AM WRONG !...MADE A MISTAKE.....WOULD LOVE TO BE DISPUTED !

Unfortunally I believe an awful lot of poeple fall into this catagory... and are NOT eligible to be considered 'INSOLVENT' by IRS rules....

[forgotten]

I am kinda stumbling over the 'no doubt she was...' part (though I admit I don't know this particular OP's background/finances...)

I tried to figure out if I am insolvent..., here are the numbers:

90K Home value
113K Mortgage
48K Credit Card Debt
110K IRA

The way I understand it, because the IRS does not exempt the IRA's, I would NOT be 'insolvent'.

I added the Debt: 113K Mortgage + 48K CC=161K
I added the Assets: 90K Home Value + 110K IRA = 200K

By IRS standards I am therefore 'SOLVENT'...outch !

PLEASE, ... SOMEBODY, TELL ME I AM WRONG !...MADE A MISTAKE.....WOULD LOVE TO BE DISPUTED !

Unfortunally I believe an awful lot of poeple fall into this catagory... and are NOT eligible to be considered 'INSOLVENT' by IRS rules....

You would be correct... On the plus side, congradulations on having with a positive net wealth. My net wealth was $300k+ in the hole when I filed.

[frogger]

I'm going for the 0% plan with my creditors.

[bailoutUSA]

With all due respect, you're talking out of your rear end. Audits are very rare, especially for someone with low income. Ignoring a 1099-c certainly will trigger a paper response in which the IRS will add the charged off debt to the taxpayers income and charge taxes, interest and penalties, but you are likely scaring people needlessly with you mis-information.

Don't bet on it - expect an audit as any tax professional will advise.

[Flamingo]

With all due respect, you're talking out of your rear end. Audits are very rare, especially for someone with low income. Ignoring a 1099-c certainly will trigger a paper response in which the IRS will add the charged off debt to the taxpayers income and charge taxes, interest and penalties, but you are likely scaring people needlessly with you mis-information.

With all due respect, certain things trigger audits; claiming insolvency to avoid taxes on forgiven debt is one of the main ones. Ask any tax professional. Folks should know that if that is done, they up their risk tremendously for an audit and yes the percentage is very high. IRS audits are not very rare and increase in volume each year. Before you state I am talking out of my "rear end" use your other end and do a thorough search on the subject before you advise someone where their voice is coming from.

[bailoutUSA]

Less than 1% of all tax returns are audited. This is public information and easily found with a quick web search. Ignoring a 1099-c is a good way to trigger an audit, but completing Form 982 will not likely trigger an audit. If fact, form 982 is becoming quite common as it is also the form used to avoid taxes on forgiven mortgage debt in the event of a foreclosure.

I am a tax professional. One of my real pet peeves in life is people who speak with authority on matters they know nothing about. There's no shame in making a misstatement, but it is shame full to continue to spread false information rather than admit you were mistaken.

With all due respect, certain things trigger audits; claiming insolvency to avoid taxes on forgiven debt is one of the main ones. Ask any tax professional. Folks should know that if that is done, they up their risk tremendously for an audit and yes the percentage is very high. IRS audits are not very rare and increase in volume each year. Before you state I am talking out of my "rear end" use your other end and do a thorough search on the subject before you advise someone where their voice is coming from.

[Flamingo]

Less than 1% of all tax returns are audited. This is public information and easily found with a quick web search. Ignoring a 1099-c is a good way to trigger an audit, but completing Form 982 will not likely trigger an audit. If fact, form 982 is becoming quite common as it is also the form used to avoid taxes on forgiven mortgage debt in the event of a foreclosure.

I am a tax professional. One of my real pet peeves in life is people who speak with authority on matters they know nothing about. There's no shame in making a misstatement, but it is shame full to continue to spread false information rather than admit you were mistaken.

If I could only tell you who I work for...anyway, the percentage of folks claiming insolvency to avoid taxes is microscopic also...so a high percentage of those microscopic in number filers encompassing a certain percentage of that 1% that you quote from the internet best had better be prepared to face a possible audit. One of my real pet peeves in life also is someone who thinks they know it all and doesn't think folks should be prepared for something they have a high chance of facing. If you really are a tax professional, you would have your insolvent claiming clients prepared and armed to face an audit after filing their return instead of quoting percentages. I'm sorry you feel this is all false information and I certainly am not ashamed of anything, let alone a comment from you. If you feel the need to start an argument with me, please have respect for the OP's thread and utilize the PM feature. Thank you.

[pcn]

If I could only tell you who I work for...anyway,

Why couldnt you?

[helpmeout]

[SIZE="3"][FONT="Comic Sans MS"]If I could only tell you who I work for...

Going by your posts, it's not that hard to guess.

[TeacherMomma]

Well, wow.

I owe 27,000 they offered me 2700. It was actually my husbands account, not mine, but I was on it as a user so they talked to me.

I will be claiming insolvency, with the help of our tax professional, because we also have some mortgage debt that was forgiven, and just ......well a lot of this crap to deal with.

[Flamingo]

Why couldnt you?

Would you post your present or past employers on here? Probably not...

[pcn]

[bailoutUSA]

If I could only tell you who I work for...anyway, the percentage of folks claiming insolvency to avoid taxes is microscopic also...so a high percentage of those microscopic in number filers encompassing a certain percentage of that 1% that you quote from the internet best had better be prepared to face a possible audit.

First, I didn't quote it from the internet I merely pointed out that that piece of information is commonly know and easily confirmed with an internet search.
Knowing that audits are fairly rare does preclude someone being prepared for
it. Simply keeping good records, if someone is legally entitled to claim insolvency, is all that is required. You claimed "chances for being audited for doing that (claiming insolvency to avoid taxes on a 10999-c) are about 99%"
was absurdly inaccurate and might needless discourage someone taking the insolvency exclusion. This is especially the case since apparently you are the moderator of this forum; which I hadn't noticed before. That would give you posts a degree of credibility, making it more important that the information is not misleading.

One of my real pet peeves in life also is someone who thinks they know it all

A complete non-sequitur

and doesn't think folks should be prepared for something they have a high chance of facing.

I never remotely suggested people not be prepared, but it is misleading to imply that being prepared is some gargantuan task. Credit card and bank statements as of the date of the charge-off would constitute most of the records needed. The only slight complication for many claimers of the exception would be putting a value on their home without getting an appraisal. Use conservative estimates for the value and be honest and there's no reason to deny yourself the exclusion you're legally entitled to.

If you really are a tax professional, you would have your insolvent claiming clients prepared and armed to face an audit after filing their return instead of quoting percentages.

As if one thing precludes the other. Silly. Especially coming from a percentage inventor.

I'm sorry you feel this is all false information.

Again, silly. I haven't suggested "this is all false information." I simply corrected a single misleading point you had made. I don't know if it is arrogance on your part or just a hyper-defensiveness you have about anyone perusing debt relief without bankruptcy.

and I certainly am not ashamed of anything, let alone a comment from you. If you feel the need to start an argument with me, please have respect for the OP's thread and utilize the PM feature. Thank you.

My comments were completely consistent with the thread. An issue and a misleading idea arose on the thread of which I have expertise so I contributed to the forum.

[Flamingo]

First, I didn't quote it from the internet I merely pointed out that that piece of information is commonly know and easily confirmed with an internet search...(big posting snip)...

As long as I have been on this forum, I speak on the side of caution...when you file taxes and fall into a class of filers where that class has a very high chance of getting audited, you assume you will be audited and take the proper steps by using a tax professional with expertise in the insolvency area and keeping appropriate records on hand and not fudging figures in any way. My "99%" was based on the "very high chance of getting audited" for the class of folks claiming insolvency. It is common knowledge that this class of filers is subject to a higher degree of audits and that has been discussed on this forum many times in the past by others besides myself. It is an area fraught with fraud with people trying to get out of paying taxes on forgiven debt. Now if you want to get in a pissing match over what you feel is the percentage and what I feel is the percentage, that's fine - send me a PM but I think you feel the need to boast your supposed credentials on here; I stand on the side of caution and advise posters like it is and if one is going to file indicating insolvency due forgiven debt, hire a tax expert, be prepared for an audit and you will have the representation of the tax expert if an audit takes place. For some reason, you consider that misleading. That's a shame. That is not meant to scare anyone, that is pure fact and protecting oneself.