we went thru a forclosure and know they will send us a 1099 as earned income on the amt they were not able to get from the sale what if the house was 250000 but they could only sell it for 150000 how much will we pay on taxes for the remaining 100000 or how are we able to calculate this for diff amts just so we can have a heads up.
2007-10-09 07:05:09 · 5 answers · asked by jessica f 1 in Business & Finance ➔ Taxes ➔ United States
This depends on how much your other income is.
Our tax system is graduated, and your rate is somewhere between 18%-38%. At least I think this is how it works.
Did you get evicted (forced foreclosure) or did you walk away before eviction. I believe the IRS will not tax you if you stayed until the bitter end and were forced out.
Write your congressmen (2 senators & your rep in the House) and encourage them to make this a non-taxable event. They are voting on this bill soon.
Good luck
2007-10-09 07:14:27 · answer #1 · answered by Gem 7 · 0⤊ 1⤋
1) Depending your other income, the federal tax bill for this event could be up to $35,000 + state taxes.
2) If you were insolvent imediately prior to the forclosure, you may be able to avoid paying taxes on this income. (See Form 982).
3) Do not try this year's tax return on your own. This is not the year to make an error. Take it to a professional that has a good grasp of insolvency and Form 982. If you are insolvent and the 982 is filled out correctly, this issue will go away this year. If done incorrectly (or ignored) this could haunt you forever.
2007-10-09 07:20:27 · answer #2 · answered by Wayne Z 7 · 1⤊ 0⤋
A lot. The $100000 is a forgiven debt, which is taxable. Add your other income plus $100000. Look up in the instructions for the 1040 what the tax on the total is. Then subtract what the would have been on the other income (without the 100K). I cannot be more exact because I do not know what your other income is.
Also, add in state income tax.
2007-10-09 07:38:16 · answer #3 · answered by StephenWeinstein 7 · 0⤊ 0⤋
Taxes on the $100K would depend on your tax bracket when you include the $100K as income - probably somewhere around $20-$25K, maybe more if you are high income in addition to the foreclosure amount.
2007-10-09 19:20:54 · answer #4 · answered by Judy 7 · 0⤊ 0⤋
Check out HR 3648. It is a bill that just passed the house and would allow debt forgiveness to not be taxable. Call your Senator and see if you can make it a priority for you.
2007-10-09 10:31:29 · answer #5 · answered by William H 5 · 0⤊ 0⤋