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Got 4 1099-c's - what is the best tax prep software for this?

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    Got 4 1099-c's - what is the best tax prep software for this?

    I want to claim insolvency on my taxes to be exempt from taxes on $ from four 1099-c's totaling $24k that my spouse recvd because she did not want to go in on bk w/ me jointly. So she settled her cc debts and now has recvd these 1099-c's. I , of course do not have these. We normally file jointly, but in this case, we might have to re-think it? I read that claiming insolvency will increase the probability of a IRS tax audit. SO What tax prep software would be the best to choose that a) understands and can process 1099-c and insolvency claims and b) defend against a (probable) audit? Or s/ we got to some human company that would also defend against an audit?

    Insolvency is defined as debts > assets. One question on this would be : we have a house we own together. So her assets would presumably be half of the equity and what would the debt portion of the house be for her ? half of the mortage or the full mortgage since , unlike assets, a mortgage cannot be parsed ( right?).

    #2
    My understanding is that software does not handle 1099-C's very well. You should probably hire a CPA if you aren't comfortable doing it yourself.

    I suspect that if your wife owns 50% of the house, she only gets to claim 50% of the debt. But, I don't know that for sure.
    LadyInTheRed is in the black!
    Filed Chap 13 April 2010. Discharged May 2015.
    $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

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      #3
      Something to keep in mind is that the determination of insolvency has to be done separately each time a debt is forgiven. So, your wife could be insolvent for the first debt that she settled, but at some point before all of the debts were settled, she may have become solvent.
      LadyInTheRed is in the black!
      Filed Chap 13 April 2010. Discharged May 2015.
      $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

      Comment


        #4
        H&R Block for the 2017 tax year asked me if I had 1099-C and needed to file a Form 982. https://www.irs.gov/taxtopics/tc431 has further details and links to the forms.

        Many many many years ago I received a 1099C, put a note -not a form- that I was insolvent, and never heard another word from the IRS nor was audited on that tax year. Decades later, a client was audited which spread to my business, me personally, then several of my vendors. That wasted a lot of taxpayer dollars as the IRS didn’t find a single dollar astray in auditing 15 businesses and individuals, and I was the only one who didn’t have million dollar lawyers on staff. IRS audits are not to be feared, they are just annoying. Basically, there is no rhyme or reason to their random audits, and if you’re one of the lucky ones, be glad you have your paperwork together.

        Also, you could do the majority of it through software then go in to one of the company’s in-person locations to ensure all your i’s and t’s are good. Use the software first to see if single or joint filing works best, until you hear what the professionals have to say, then double check their math.

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