Hey guys, John Compton, president of Omega Credit Repair and Counseling Services here with this week's best credit video blog. Today, we're going to be talking about something that we receive a lot of questions about this time of year: 1099-Cs. Essentially, when a creditor or collection agency forgives a portion of your debt that they claim you owe, they can send you a 1099-C for that forgiven amount. This is true even if you have settled for less than the original amount they claimed you owed. For example, let's say you had a credit card with a charged-off balance of $3,000, but you agreed to a settlement of $1,000. In this case, the credit card company can still send you a 1099-C for the remaining $2,000 difference. Now, here's the important thing to know about this 1099-C and the $2,000: it is considered taxable income. Therefore, you must include it in your income tax filing. If you receive a 1099-C, make sure you promptly hand it over to your tax preparer. Don't wait; do it sooner rather than later. Failing to include it in your filing could lead to an audit by the IRS. And remember, Compton is here to remind you that next month when you're paying someone's mortgage, why not make it your own? Also, be sure to check out originatorfence.com for more information about the upcoming Originator Fest event at the Gaps in Iowa Convention Center on Galveston Island, Texas, taking place on May 1st and 2nd. We have special appearances by Frank RA and Brian Stephens of the National Real Estate Post. Thank you for tuning in.
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1099 C filing deadline Form: What You Should Know
Income tax laws govern both the amount of reported income and the form and timing of payments. For example, the amount of income reported by individual taxpayers may be reported by any of several “source” methods. In contrast, the timing of payments is controlled by the due date for a Form 1099-C payment. For example, a payment due on April 15 that would otherwise be subject to tax withholding and payment requirements because the creditor is a financial entity would be reported to the consumer on Form 1099-C (or may be reported without withholding, depending on how the payment was received). In contrast, if a payment due on April 15 that is subsequently paid on a later date is reported to you on April 15, the payment would be reported to the consumer as an ordinary income, not income with respect to which you would be required to withhold and pay tax, including under any provision of the federal income tax law that specifically requires or provides for withholding taxes from such payments. What if the creditor files a 1099-C with the IRS in January or earlier? That will result in no taxes being withheld (unless you do not have good cause, such as a fraudulent claim of income, an invalid Social Security number or the bankruptcy of the creditor). If you received a 1099-C from the IRS in February and you do not have reasonable cause or good cause, you may report the Form 1099-C as regular income (that is, as reported by you, not by the creditor), and you may also report the payment as income and withhold taxes on the payment (subject to any provisions of the federal income tax law that give you the discretion to withhold tax). You may also use the 1099-C to establish the liability for payment of other taxes due you, to establish eligibility for certain refund or credit programs, to establish the amount of income, or to establish eligibility for an exemption from tax under any federal or state law. Form 1099-C: Cancellation of Debt | Credit.com What is the meaning of “cancellation”? Canceled means the creditor has given you permission to cancel the debt. This could be due to: A change in the law or an order (or consent) to release you from the contract. The creditor no longer has the rights that it had when you entered into the contract. If so, the creditor can no longer collect. You may cancel the debt only for specific reasons.
online solutions help you to manage your record administration along with raise the efficiency of the workflows. Stick to the fast guide to do Form 1099-C, steer clear of blunders along with furnish it in a timely manner:
How to complete any Form 1099-C online: - On the site with all the document, click on Begin immediately along with complete for the editor.
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Video instructions and help with filling out and completing 1099 C filing deadline
