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    kw709394's Avatar
    kw709394 Posts: 1, Reputation: 1
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    #1

    Jan 13, 2009, 12:25 AM
    Receive a 1099-A. Should I include it in my income tax return?
    I received a 1099-A in CA. The fair market value is less than the balance of principal outstanding. Should I wait for 1099-C to file income tax return? What should I do now on the income tax return? Will the bank go after me the debt or send me a 1099-C later?
    MukatA's Avatar
    MukatA Posts: 7,110, Reputation: 176
    Tax Expert
    		  
    #2

    Jan 13, 2009, 05:58 AM

    Wait for 1099-C. Debt cancelled is your income.

    1. You may have to report sale on Schedule D (Form 1040).
    2. Any debt canceled is your income.
    3. If you lived in the house for two years and owned it for two years in last 5-years, you may be eligible to exclude gain of up to $250,000.
    Read about foreclosure or repossession Your U.S. Tax Return: Foreclosure or Repossession of Main Home
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #3

    Jan 14, 2009, 12:04 PM
    There is a process by which you can CANCEL the imputed income from the cancelled debt on a foreclosure. The home in question must be your primary home and the foreclosure must be on your FIRST mortgage.

    Contact a local tax professional. He/she should be aware of how to apply for the cancellation.
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