forgiveness of debt
Date: Sun, 08/19/2012 - 08:28
The IRS forgave a debt or one of your creditors? Generally when
The IRS forgave a debt or one of your creditors? Generally when a debt over $600 is forgiven you receive a 1099 which is consider income. You then pay tax on the forgiven debt.
You might not necessarily have to pay tax on the 1099's, if you
You might not necessarily have to pay tax on the 1099's, if you were insolvent at the time the debt was forgiven.
I can't remember which form(s) need to be filed with your income tax to claim insolvency, but try Googling 1099-c and insolvency.
Since the IRS is asking you for money, I'm assuming that you got the 1099's at least a year ago. If so, you will need to file an amended return, including the insolvency related paperwork.
At this point, it would probably be a good idea to get some assistance from a CPA, to help with the amended return.
Good luck.
