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There are probably several ways to do this.
Your first option would be to take all of your tax return information and your 1099 to a professional tax person. While you're at it, take documentation on all your debts at that time (loans, collections, credit cards, EVERYTHING). You can try to file an amended return. If you were insolvent (had more debt than assets at the time the debt was forgiven), you probably won't owe anything. This would be my first choice.
You could also wait for the IRS to audit you. I claimed insolvency when my debt was settled and the unpaid amount was forgiven (2010 tax return). But I didn't include the right paperwork. Earlier this year, I got an audit letter in the mail, stating that I owed something like $800 (I had a couple thousand in forgiven debt). All I needed to do was fill out the insolvency worksheet, and the audit was disolved. Just to put it in perspective, I made about $20k that year, and I got audited (unemployment, waitressing, bartending. It was a bad year). They can audit up to 3 years back.
If the 1099C was given to you in Jan 2011, you should have filed that with your 2011 return this year. There's probably still plenty of time to get an amended return filed.
Best of luck!!!
Thank you very much for the input! Blessings!
Golo did I read correctly that you just now recieved the 1099? By any chance did you keep the envelop and did it have an actual postmark? By law all 1099's and W2's must be mailed by January 31st of the year after they apply, so January 31st 2012 for tax year 2011. If you can prove Sears just now sent it to you waaayyy after the deadline you might avoid any penalties for failing to include in an your return. Let me know what ypu have and I'll comment further.
@Anonymous wrote:Golo did I read correctly that you just now recieved the 1099? By any chance did you keep the envelop and did it have an actual postmark? By law all 1099's and W2's must be mailed by January 31st of the year after they apply, so January 31st 2012 for tax year 2011. If you can prove Sears just now sent it to you waaayyy after the deadline you might avoid any penalties for failing to include in an your return. Let me know what ypu have and I'll comment further.
+1 ... I forgot to mention, if you do wait for the IRS to audit you, you will be hit with CRAZY late fees and penalties. Try to prove they sent it late. If you were insolvent, make sure you can prove that as well. You should end up okay.
I've had to amend our returns, complete with self-employment for two people , the last two years and it really is not that daunting, and I agree that the IRS is definitely more agreeable if YOU go to THEM rather than if they come after you, especially if you act fast to correct any errors.
Call back and try to get a different rep. They can't have it both ways.
They can note how much the charge-off was for, but not as the current balance. Maybe as a "high balance" or in the comments section.
Keep at them until you get a definitive answer.
@apandabear wrote:Call back and try to get a different rep. They can't have it both ways.
They can note how much the charge-off was for, but not as the current balance. Maybe as a "high balance" or in the comments section.
Keep at them until you get a definitive answer.
+1