I too received a form 1099-A and am confused about how this is going to affect my return! I have not received a 1099-C. The outstanding principal balance was $271,593. And FMV is noted as $284,104. However the house sold for $170,500. Box 5 is not checked. This was my primary residence in Arizona. Is the tax liability the difference between the outstanding loan amount and FMV or the amount it was sold for? Thanks for all the good information!

Good news - you have no tax liabaility on this at all! Since the FMV was greater than what you actually owed, in essence you settled with the bank by giving them property that was worth more than the amount you owed. (They in turn decided to sell it for less than FMV, but that's their problem, not yours). Hence there is no income to you due to the foreclosure.

Also, just so you know - if there was a tax liability they would have sent you a form 1099-C, not a 1099-A.

Are you sure? I just received the same thing and I am freaking out. Principal owed is 195k and FMV is 224- I also received a letter that the house was auctioned for 170k. Will I owe taxes? Box 5 was also not checked.

Box 5 is not checked that means you are not personally liable for payment of debt. You had non-recourse loan.
Non-Recourse Loan. A non-recourse loan is a loan for which the lender’s only remedy in case of default is to repossess the property being financed or used as collateral. The lender cannot pursue you personally in case of default.
Just keep 1099-A for your own record.

MukatA - Thank you so much. One more question. Do I have pay taxes on the 1099-A as if the sale price was income? If so do I use the sale price or the FMV? Here is how it appears

Box1- Dec 29 2011
Box 2- 193,652.37 (principal)
Box 3- Blank
Box 4- 224,064.77 (fmv)
Box 5- Not Checked

Ps- I understand that BOA can not come after me for the default but I don't understand if the sale price is constituted as income hence the 1099.

You have essentially sold the house to there bank for $195K. You treat that amount as sale proceeds, not income. If $195K is more than your cost basis in the property then you have a gain, and would owe capital gains taxes on the gain amount (but only if you don't qualify for an exemption - post back if you want miore detail on that). If $195K is less than your cost basis then you have a loss. Unfortunately you can not deduct this loss from your taxes, as losses on personal property are not deductible.

I have a 1099-A on my foreclosed home.
Balance owed: $352,445
FMV: $354,863
Box 5 not checked.
How does this effect me as a W2 employee

Mark, Texas

Mark - did you read the earlier posts in this thread? If you had then you would know that if FMV is greater than amount owed there is no tax consequence to you, UNLESS the balance owed is greater than your cost basis in the home.

Being a "W2 employee" has no bearing on this whatsoever.

This is actually a questions. I have a 1099-A and can't find or understand what to do with it. Since it is a 1099-A and not a 1099-C do I need to do anything with it or do I wait until I get a 1099-C. And if I do nothing will it affect my refund?

Box 2: $204,915.21
Box 4: $91K
Box 5: Yes

The house sold a couple months later for $68,500

Thanks for any insight.
D in AZ

D in AZ: I would expect that you should receive a 1099-C in addition to this 1099-A, unless you are eligible to exclude this from income tax reporting. For example if you were either bankrupt or insolvent, or if the debt meets the criteria for qualified principal residence exclusion then it is not taxable. See:

Tax Topics - Topic 160 Form 1099-A (Acquisition or Abandonment of Secured Property) and Form 1099-C (Cancellation of Debt) (http://www.irs.gov/taxtopics/tc160.html)
And follow the link to Publication 4681 for details. See especially the section called "Qualified Principal Residence Exclusion " on page 7 of Pub 4681.

Hello:

Just found this site and would LOVE some help.

Got two 1099-A's. One for the primary loan, one for the second loan we HAD to agree to when we got the loan. Here are the details:

Form 1
Box 1: 06-10-11
Box 2: 186, 738 (Balance)
Box 4: 194, 985 (FMV)
Box 5: "X" in the box

Form 2
Box 1: 06-10-11
Box 2: 25,000 (Balance)
Box 4: 194, 985 (FMV)
Box 5: "X" in the box

Give it to me straight... I can take it... I think. Thank you for you for any help.