Insolvency and Tax Refund
Date: Fri, 01/07/2011 - 09:09
Insolvency and Tax Refund
Your tax refund is based on your tax filing. So, yes, if you de
Your tax refund is based on your tax filing. So, yes, if you deduct the 1099 as insolvent then the net impact should be that you have no tax impact and therefore receive the resulting refund you would have received it the 1099 didn't exist.
Check out this thread and see if it helps, http://www.debtconsol
Check out this thread and see if it helps, http://www.debtconsolidationcare.com/settlement/about64336.html
You do not include the forgiven debt on your 1099c if you are insolvent. Do the worksheet http://www.irs.gov/pub/irs-pdf/p4681.pdf
(worksheet is on page 6)
Do not include a canceled debt in income to the extent that you were insolvent immediately before the cancellation.
Clarifying this, the 1099c IS the amount of your forgiven debt.
Clarifying this, the 1099c IS the amount of your forgiven debt. But it is offset by the insolvency so you will not pay tax on the amount of the 1099.