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    cdkb's Avatar
    cdkb Posts: 4, Reputation: 1
    New Member

    Feb 24, 2006, 06:27 AM
    I have already received my refund for this year. After receiving my refund, I received a 1099-C form. I took it to my tax account and she said that the $65,340.71 in box 2 (it also listed interest in box 3 $9577.90), that I would have to pay taxes on, which is $14,000. I told her, isnít my ex responsible for half of this, she said we both have to claim the form and if he doesnít they will come after me for all the money, is that true? His form came to me, because know one knows where he is. I donít understand why I have to pay taxes on a house that had to foreclose on due to him leaving me. I think I might be considered insolvent at the time, but how do I go about reporting this? I donít want to turn this form in and owe $14,000. I wasnít aware of anything like this happening; the house was all I had owed prior to the divorce. My lawyer advised me that since I canít keep up the payments on the house that I would have to let the house go into foreclosure, the 1st mortgage was satisfied, but the second wasnít. If I would have known this was going to happen, I would have filed bankruptcy, but itís to late now, right? I recently got re-married and I donít want to bring my past issues into my new marriage. How do I go about handling this? My new husband and I filed together this year, in the future can they go after our refund together or would I be better off filing separately? Is there any way out of this, since my ex is no where to be found (at least I canít contact him, the IRS probably can). I want to do right by this form; I just want to know my rights. I was unable to pay due to going through a divorce. The second mortgage let us borrow more money then what the house appraised at. I may be given you too much detail, but my tax account couldnít answer these questions. If I am going to owe the IRS money, do they do payment plans (very small ones.. i.e $20 a month)? IS there a way to get this dismissed due to not having funds to pay the loan at the time, due to a divorce (insolvent? )? Is there someone I can consult with at no cost to me about this form before I file it? I would like to know my options. I would appreciate any questions you can answer for me. Thank you in advance for your help with this matter.

    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,818, Reputation: 846
    Senior Tax Expert

    Feb 24, 2006, 10:30 AM

    You should immediately contact an enrolled agent and do an initial consultation on this matter. You can find them listed in your local Yellow Pages.

    An enrolled agent is a tax specialist licensed by the IRS. They not only prepare returns, but also represent their clients in matter before the IRS.

    The circumstances you describe require the services of an enrolled agent, because you will likely have to amend your 2005 tax return to include the money annotated on the Form 1099-C, then request relief from the IRS. That is what an enrolled agent does. He/she will not work for free, but the fees will be a lot less than a CPA's or tax attorney's fees.

    On the legal side, you may have an action against your divorce attorney. If he did not know the tax consequences of telling you to allow the house to go into foreclosure, then he should have gotten tax advice from a competent tax professional. I believe he was negligent.
    cdkb's Avatar
    cdkb Posts: 4, Reputation: 1
    New Member

    Feb 26, 2006, 08:29 AM
    Thank you for your help. I have one more question for you. I contacted the IRS and they told me to claim insolovent I need to fill out form 982 and 1040X - part 2 only. The debt was written off on 9/14/05. The IRS told me I need to add up my assets at the time the debt was cancelled and my debt at the time including the write off. Do I only figure up my assets and debt for the month of September? DO I have to go back further than September? The IRS also said the differnce is what I have to claim on my taxes, for example if my debt is 65,000 and my assets are 3,000, then I have to pay taxed on $3,000. I hope this makes sense. I only have one enrolled agents where I live, and he charges $500 retainer fee and $95.00 a hour and currently I am inquiring a lot medical bills and I don't have the money. I am trying to do a research on my own before I have to retain someone.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,818, Reputation: 846
    Senior Tax Expert

    Feb 26, 2006, 07:42 PM
    Where are you located? I am surprised there is only one EA in your town. Look around and check out some local tax preparers who can fill out the Form 982 for you.

    You determine your assets at the time of the discharge. Given the circumstances, I would be surprised if you had any assets.

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