Form 1099-A Help!!!

[novayalife]

I was discharged last summer and my home was included in chp 7 bankruptcy. I have now recieved a 1099-A tax form from my mortgage lender. It states in box 5 that I am personally liable for repayment of this debt. I am so confused. How does this effect me filing my taxes? Why does it state I am liable even though I was discharged?

[aces67]

I don't know what forms you need but since you filed BK you are NOT liable.

[keepmine]

You need IRS form 982.

[JoeBankrupt33]

Box 5 is used to tell the IRS whether or not the loan was a recourse loan when the debt was created. Most mortgages are recourse loans, meaning that the lender can sue you for a deficiency after already taking the collateral. This is what the "personally liable" means.

Of course, they can't sue you for the deficiency because it was included in bankruptcy.

Now, if the amount in box 4 is greater than the amount in box 2, then you technically have a "gain" on the "sale" of the home. This doesn't affect most people, since the IRS allows you to exempt $250,000 worth of gain every 2 years (or $500,000 for a couple). In this case, you do absolutely nothing with your taxes.

[JoeBankrupt33]

You need IRS form 982.

Only fill out this form if the bank issues you a 1099-C which is for cancellation of debt. A 1099-A does not report debt cancellation and if the lender cancels debt in conjunction with a foreclosure, then they are required to issue a 1099-C.

[novayalife]

In this case, you do absolutely nothing with your taxes.

But I still have to report this somewhere when I file correct? There is a small difference (about $6000) between box 4 and box 2. Im am just worried that this will impact my tax refund if this is considered income.

[JoeBankrupt33]

Correct, you do nothing. You only report the sale of a home if it is taxable. I know it seems like you would have to fill out some sort of form, but you don't.