i heard they send you a 1099 form for your taxes after a foreclosure is done, this means i would owe the IRS a lot of money. So would filling bankruptcy help me to not owe anything?
2007-04-26 08:24:06 · 6 answers · asked by susy m 1 in Business & Finance ➔ Taxes ➔ United States
a 1099 form just shows the proceeds from a foreclosure; if you were going to MAKE money maybe; but it that were the case, you would sell not get forclosed. YOu will end up owing or at best breaking even.
for all intents and purposes bankruptcy has nothing to do with your foreclosure.
Last a bankruptcy judge won't dismiss a tax bill.
2007-04-26 08:27:54 · answer #1 · answered by wizjp 7 · 1⤊ 0⤋
The bankruptcy will not help you avoid the taxes, however, you shouldn't have to pay taxes on it at all. If the house was your primary residence for 2 of the last 5 years, you can fill out a sale of home form with next years taxes. On the form, you enter the amount you paid for the home and the proceeds from the "sale" of your home (or what the bank said the home was worth/got for it in sale). Any profit up to $250,000 is tax free per person ($500,000 if you are married). This should give you some cover if the IRS asks you about the foreclosure.
A foreclosure is not a forgiveness of debt which CAN be taxable income depending on your situation.
2007-04-26 15:48:05 · answer #2 · answered by Patrick S 3 · 0⤊ 1⤋
The parts of Patrick S's answer that are accurate have nothing to do with your situation. If there was a gain to exclude, the1099-A you receive will not show a forgiveness of debt. If you were insolvent at the time of the foreclosure, you may be able to exclude all or part of the forgiven debt from your income for tax purposes.
Bankruptcy does not discharge tax debt.
2007-04-26 20:12:54 · answer #3 · answered by STEVEN F 7 · 0⤊ 0⤋
While this probably isn't the answer you're looking for, filing bankruptcy may & may not get you out of paying taxes, you will owe however your goodname/credit for the next 7yrs.
2007-04-26 15:28:36 · answer #4 · answered by civicnitro 3 · 0⤊ 0⤋
Nope, your current tax debt cannot be discharged through bankruptcy.
2007-04-26 15:44:15 · answer #5 · answered by Bostonian In MO 7 · 0⤊ 0⤋
I got a better idea. Sock all the cash you can and leave California and find a real place to leave. The place is designed to be A. ) Corrupt. B. ) Transient.
Do yourself the favor.
2007-04-26 15:27:58 · answer #6 · answered by vanamont7 7 · 0⤊ 0⤋