1099-C

[Anonymous]

So I got a 1099 today in the mail...Its for a debt I settled last year in January with Hudson And Keyse...My questions is what is a 1099?...Do I have to report it to the IRS...The amount forgiven was 2400 dollars..And how is it income?...It dont make sense to me...Any help?

[laz98]

yes, you do have to report it to the irs.  i have no idea why it's considered income.

[Itsmeagain]

A 1099C is defined as extra earned income and must be filed with your tax return for the year in which you receive the 1099C.  The reason it's considered income by the IRS is because the creditor had declared the money as a loss and consequently will be deducting that money from their tax burden.  Therefore, the IRS will expect you to pay tax on this money the same as if you had earned the money by working for it.

Since this is considered regular income, it will (of course), affect your return by reducing the amount you will be getting back or increase the amount you are required to pay.

Message Edited by Itsmeagain on 02-08-2009 06:17 AM

[Anonymous]

Thank you so much for clarifying for me...I just think its bs that they want their money so bad and you go ahead and work with  them with no mention of a 1099 and then boom I get one in the mail...But its my debt and its gonna be taken care of...I'm gonna guard my 1099 just in case some other CA tries to come after me for the same debt...Thanx again for the info!!

[Ned505]

If one is able to get a baddie deleted (through a PFD) will that result in a 1099-C if a less than full balance is accepted.

[Quarterchips]

***ATTENTION*** make sure you look into 1099C exclusions (notably insolvency), as the income could be deducted.  If you're insolvent, it means that you have more debts than assets.  If the 1099C is for a greater $ amount than you're insolvent, then it can be deducted up to the $ amount you're insolvent on IRS form 982 (please contact a licensed tax professional for futher details, as I take no responsibility for any actions you may take regarding this posting).