https://i0.wp.com/georgiabankruptcylawgroup.com/wp-content/uploads/2020/02/tacpic.png?fit=386%2C211&ssl=1 211 386 Atlanta Bankruptcy Expert and Attorney Lorena Saedi https://georgiabankruptcylawgroup.com/mainheaderuse/ Atlanta Bankruptcy Expert and Attorney Lorena Saedi2020-02-05 23:21:042020-06-22 04:51:04What Happens if You Receive a 1099 From a Creditor After You File for Bankruptcy?
WHY WAS I SENT A 1099-C AFTER DISCHARGE?
Did you receive a 1099-C after your bankruptcy discharge? A 1099-C is generated by a financial institution, such as a lender, after a qualifying event. A qualifying event occurs when the entity has written-off or canceled a debt in excess of $600. Cancelling the debt requires the bank to send you the 1099-C regardless of whether you received a discharge in bankruptcy. This means the 1099-C you received was likely generated appropriately, but does not mean that you must take it as actual income on your tax return. If you had not filed bankruptcy, then you may have had to report the amount of forgiven debt on the 1099-C as gross income and pay taxes on the amount to the IRS. However, since you filed bankruptcy, generally there are no income tax consequences, but you will need to take appropriate action to handle the 1099-C.Note: Not all institutions send a 1099-C, so do not expect one for each debt you discharged. In addition, sometimes a 1099-C may be sent a few years after the bankruptcy discharge.WHAT DO I DO WITH THE 1099-C? EXCLUDING 1099-C CANCELED DEBT FROM INCOME AFTER BANKRUPTCY
In addition to filing your 1040 with the IRS, you will need to attach a Form 982 to your federal income tax return. By filling out Form 982 for the IRS, you will be letting them know that you are not adding the canceled debt to your gross income on your tax return and that the debt is excluded from your income due to the filing of a bankruptcy. The instructions for Form 982 as well as IRS Publication 4681 provide more detail on excluding canceled debt from your income.
What Happens if You Receive a 1099 From a Creditor After You File for Bankruptcy?
If you filed for bankruptcy and discharged the debt on the 1099-C in bankruptcy, then you should check box 1a.
This box says “Discharge of indebtedness in a title 11 case” (Title 11 is the bankruptcy code).
If you have any questions about Chapter 7 bankruptcy or Chapter 13 bankruptcy please feel free to go to https://saedilawgroup.com or contact us at firstname.lastname@example.org
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