by Fresh Start Tax | Sep 16, 2015 | Tax Help
We are the “AFFORDABLE” professional tax firm with over 206 years of professional tax experience, since 1982.
We have over 60 years of direct work experience in the local, district and regional tax offices of the Internal Revenue Service.
We have worked as IRS supervisors, as managers, and teachings instructors.
As former employees we taught new IRS agents their job. You want our years of experience working for you.
If you have any sort of IRS problem contact us today and we can review with you various solutions to go ahead and help with an IRS final notice, certified mail, intent to levy, the filing of a federal tax lien, payment plans and the settling of your case through an offer a compromise.
We will thoroughly review your case and go over various options and remedies to completely end your IRS problem or situation.
If you have received an IRS final notice, we can stop IRS today with the simple filing of a power of attorney and with a direct IRS conversation.
We handle all correspondence and you will never communicate with the Internal Revenue Service.
We can talk to you about the removal or the filing a federal tax liens, work out a payment plan, release a tax levy or talk to you about settling your debt to the offer in compromise program.
Through the new IRS fresh start initiative many more taxpayers are settling their debt for pennies on a dollar, however you must be a qualified candidate.
If you are going to owe back taxes and wish a payment plan or which to reach a settlement with them call us today for a free initial tax consultation.
The systems are very simple within 10 minutes you will be completely educated on how to make the best decision for your current financial condition and situation.
Your current financial system will indicate the type of way IRS will close case. There is true value in hiring certified tax professional.
IRS Tax Billing Notices
If IRS sends you a document it is time sensitive and taxpayers must follow-up on all time sensitive letters. Never ignore an IRS tax notice, they will follow-up and do exactly what they say.
Once a tax return is filed or IRS initiates a tax assessment, IRS sends out a series of five notices and those notices are sent five cycles or five weeks apart.
IRS has the option, depending on the dollar amount and the history of the taxpayer to speed up those assessments.
IRS Billing Notices
These IRS tax notices are all sent out in five-week billing cycles.
1. CP 14 – This is the notice of balance due,
2.CP 501 – This is a Bill that you still owe tax,
3. CP503 – Important, Immediate Action Required
4. CP 504 – Urgent Notice – We Intend to Levy on Certain Assets, Please Respond Now
5. CP90/CP297/ – IRS Letter 1058 – Final Notice of Intent to Levy of Your Right to a Hearing
6.CP 91- CP298 -Final IRS Notice, You must answer his Notice!
Call us today for free initial tax consultation. You will speak directly to a true tax professional.
IRS Final Notice, Certified Mail + STOP IRS NOW + Intent to Tax Levy & Lien + IRS Payment Plans + Settle, Offer in Compromise + Unfiled Tax Returns +
by Jim Magary | Sep 16, 2015 | Tax Help
We are the “AFFORDABLE” professional tax firm with over 206 years of professional tax experience, since 1982.
We have over 60 years of direct work experience in the local, district and regional tax offices of the Internal Revenue Service.
We have worked as IRS supervisors, as managers, and teachings instructors.
As former employees we taught new IRS agents their job. You want our years of experience working for you.
If you have any sort of IRS problem contact us today and we can review with you various solutions to go ahead and help with an IRS final notice, certified mail, intent to levy, the filing of a federal tax lien, payment plans and the settling of your case through an offer a compromise.
We will thoroughly review your case and go over various options and remedies to completely end your IRS problem or situation.
If you have received an IRS final notice, we can stop IRS today with the simple filing of a power of attorney and with a direct IRS conversation.
We handle all correspondence and you will never communicate with the Internal Revenue Service.
We can talk to you about the removal or the filing a federal tax liens, work out a payment plan, release a tax levy or talk to you about settling your debt to the offer in compromise program.
Through the new IRS fresh start initiative many more taxpayers are settling their debt for pennies on a dollar, however you must be a qualified candidate.
If you are going to owe back taxes and wish a payment plan or which to reach a settlement with them call us today for a free initial tax consultation.
The systems are very simple within 10 minutes you will be completely educated on how to make the best decision for your current financial condition and situation.
Your current financial system will indicate the type of way IRS will close case. There is true value in hiring certified tax professional.
IRS Tax Billing Notices
If IRS sends you a document it is time sensitive and taxpayers must follow-up on all time sensitive letters. Never ignore an IRS tax notice, they will follow-up and do exactly what they say.
Once a tax return is filed or IRS initiates a tax assessment, IRS sends out a series of five notices and those notices are sent five cycles or five weeks apart.
IRS has the option, depending on the dollar amount and the history of the taxpayer to speed up those assessments.
IRS Billing Notices
These IRS tax notices are all sent out in five-week billing cycles.
1. CP 14 – This is the notice of balance due,
2.CP 501 – This is a Bill that you still owe tax,
3. CP503 – Important, Immediate Action Required
4. CP 504 – Urgent Notice – We Intend to Levy on Certain Assets, Please Respond Now
5. CP90/CP297/ – IRS Letter 1058 – Final Notice of Intent to Levy of Your Right to a Hearing
6.CP 91- CP298 -Final IRS Notice, You must answer his Notice!
Call us today for free initial tax consultation. You will speak directly to a true tax professional.
IRS Final Notice, Certified Mail + STOP IRS NOW + Intent to Tax Levy & Lien + IRS Payment Plans + Settle, Offer in Compromise + Unfiled Tax Returns +
by Fresh Start Tax | Sep 15, 2015 | Tax Help
We are an “AFFORDABLE ” professional tax firm that has been in private practices 1982. We can completely settle your case!
If you wish to settle back IRS taxes can call us today to learn about the different systems IRS uses to settle back tax debt. Being former IRS agents we know the system.
We are composed tax attorneys, CPA’s and former agents.
If you have any back tax issues with the Internal Revenue Service or have not filed back income tax returns, we can result in settle your case all at the same time.
We have over 206 years of professional tax experience and over 60 years of working directly for the Internal Revenue Service in the local, district, and regional tax offices of the IRS.
As former IRS agents we know every process and system that exist within the Internal Revenue Service.
*Fresh Start Tax LLC is a much different firm than other companies*
We do our own work in-house, most companies sub their work out to backend offices.
We are staffed with tax attorneys, CPAs and former IRS agents. Our vast experience and knowledge with the Internal Revenue Service works in your favor.
If you want to settle your back taxes, IRS will require a current financial statement along with documentation.
IRS rules require only form 433F or 433A may be used along with bank statements, copy of pay stubs, and monthly expenditures.
The Internal Revenue Service will compare your expenses against your income and compare that to that of the national, regional, and localized standards and come up with the ruling.
All tax returns must be filed. Over 16 million taxpayers do not file annual tax returns.
At some point if you do not file the Internal Revenue Service will catch up with you do not keep your head in the sand
If you have not filed tax returns we can prepare your returns with little or no records do our reconstructive methods we learned IRS.
If you did not file your back tax returns, IRS can prepare them for you and you will owe more money than you should. IRS as the ability under 6020B to file for you.
If you do not respond to the IRS bills and notices they send out as a result of filing your tax returns IRS will follow-up with tax levies in the filing a federal tax liens
IRS levies (bank & wages ) approximately 1.9 million taxpayers each and every year.
We can remove an IRS tax or wage garnishment levy within 24 hours of receiving your current financial statement and or get you placed into a payment program or tax hardship depending on your situation.
Settling IRS Tax Debt OIC
If you wish to settle your IRS tax that you will do have to do so through the offer in compromise program. I am a former IRS agent who taught this program at the IRS.
As a general rule the IRS usually settles tax debt by putting cases and hardship, payment plans or through the offer in compromise program.
What is an Offer in Compromise
An offer in compromise (OIC) is an agreement between a taxpayer and the Internal Revenue Service that settles the taxpayer’s tax liabilities for less than the full amount owed.
If the liabilities can be fully paid through an installment agreement or other means, the taxpayer will in most cases not be eligible for a OIC.
In order to be eligible for a OIC, the taxpayer must have:
1.• filed all tax returns,
2.• made all required estimated tax payments for the current year, and
3.• made all required federal tax deposits for the current quarter if the taxpayer is a business owner with employees.
In most cases, the IRS will not accept a OIC unless the amount offered by the taxpayer is equal to or greater than the reasonable collection potential (the RCP). The reason for this is quite simple, the IRS can just sees the asset and collect the full value.
The RCP includes the value that can be realized from the taxpayer’s assets, such as real property, automobiles, bank accounts, and other property.
In addition to property, the RCP also includes anticipated future income, less certain amounts allowed for basic living expenses.
Most offers in compromises take any where between 20 hours to work by an IRS agent. Also if a the offer and compromise is accepted it becomes a matter of public record and is available for public inspection.
The offer in compromise or tax settlement stays on record for one year at the regional tax offices for public inspection. That’s right, you can walk right into a regional office and asked them to see their accepted offers in compromise.
You can check for the district offices through the Internal Revenue Service website.
The IRS may accept a OIC based on three grounds.
1. Acceptance is permitted if there is doubt as to liability. This ground is only met when genuine doubt exists under applicable law that the IRS has correctly determined the amount owed.
2. Acceptance is permitted if there is doubt that the amount owed is fully collectible. This means that doubt as to collectibility exists in any case where the taxpayer’s assets and income are less than the full amount of the tax liability.
3. Acceptance is permitted based on effective tax administration.
An offer in compromise may be accepted based on effective tax administration when there is no doubt that the tax is legally owed and that the full amount owed can be collected, but requiring payment in full would either create an economic hardship or would be unfair and inequitable because of exceptional circumstances.
We are a full service tax firm, since 1982.
We are A+ rated by the Better Business Bureau. Get help from true IRS tax professionals.
Settle Back IRS Taxes + Unfiled Tax Returns + IRS Levy’s + IRS Payments + IRS Problems = Former Agents + Fast Affordable
by Jim Magary | Sep 14, 2015 | Tax Help
We can get your IRS tax levy, wage garnishment levy released within a 24-hour period of time and close your case at the same time. AFFORDABLE, since 1982.
As former IRS agents and managers we know the system inside and out.
We have a combined 60 years of direct work experience in the local, district, and regional tax offices of the Internal Revenue Service and know exactly how to settle your case with the Internal Revenue Service.
As former IRS agents we taught tax law and tax procedure to new IRS agents.
If you are in receipt of an IRS tax levy, wage levy or bank levy garnishment contact us today and we can get your tax levy released in your case closed.
Within 24 hours of receiving your fully documented financial statement we guarantee that you will have a release of your IRS bank levy or wage garnishment levy.
We will speak with you about settling your tax debt to the offer in compromise program.
Our firm will not submit an offer in compromise until we walked through the offer in compromise pre-qualifier tool to make sure that you can settle your tax debt for pennies on dollar. You should not give your money to any firm to file an offer in compromise unless they walked to this program with you.
There are many firms out there promising without having a clue about actual offers in compromise. Beware of these false companies. always check to credentials of the persons working your case.
As a IRS revenue officer I both work this program was a teaching instructor for the tax debt settlement program. I’m a true IRS tax expert for the offer in compromise.
The Internal Revenue Service accepted 38,000 offers in compromise last year for average of $6500 per settlement.
Taxpayers should be aware that there is a pre-qualifier tool for the offer in compromise program. I suggest everyone the walk through this particular tool given by Internal Revenue Service to find out for a qualified candidate
IRS Tax Levy, IRS Wage Garnishment Releases = Get Your Money Back
The IRS filed 1.8 million the bank and wage garnishment levies last year. So if you received a bank or wage garnishment levy you are not alone.
Before IRS will release a tax levy, a wage garnishment or bank seizure, Internal Revenue Service will need a current documented financial statement.
If your case is in the automatic collection system you will be filling out and documenting form 433F which you can find directly on our website. It is the only form the Internal Revenue Service will use.
When calling our office we will complete the form, speak to the Internal Revenue Service and within 24 hours of having your fully documented financial statement we can get your IRS tax levy released.
If the cases are in the local IRS office form 433 a will be required and a much more detailed investigation will be made on your current financial statement.
Being a former IRS agent teaching instructors gives us a huge advantage and the benefit of our experience is invaluable to our clients.
The filling out of your financial statement is critical into the settlement of your case. using former IRS agents and managers will give you a tremendous advantage.
With that current financial statement you will need to provide IRS the last three months of your bank statements, copies of your pay stubs and your monthly expenses.
IRS does a thorough review of your financial statement therefore you want to make sure you are both honest and accurate. It is always best to have a trained tax professional prepare and negotiate your case with the Internal Revenue Service.
As a general rule, IRS will not release your levy until all your tax returns are filed. We can prepare all your back tax returns with little or no records. We are tax experts for reconstruction. We can also secure information from IRS tax transcripts.
Internal Revenue Service usually closes your case off the enforcement two general ways:
Based on your current financial statement, IRS will put you in a:
1. currently uncollectible file or,
2. put you in a payment agreement.
Over 40% of collection cases wind up in a current tax hardship and 6.5 million other taxpayers are put into monthly installment payment plans.
It is important you file all back tax returns if not the IRS can file for you under 6020 B of the Internal Revenue Code and they will make sure you get no deductions.
IRS will not give any non-filer any deductions or exemptions that they prepare under 6020B.
IRS may fail to release an IRS tax levy wage garnishment or bank levy because taxpayers have failed to file back tax returns. We can file your return visit a 48 hour period of time.
After the review of your IRS financial statement we can let you know whether you are a possible debt settlement candidate for the offer in compromise program. After speaking to us you will fully know the IRS collection system.
One last note of interest, it is very critical all taxpayers respond to all IRS notices because IRS intends to follow-up on all the dates given on each and every notice sent.
Call for free initial tax consultation.
STOP IRS Bank Tax Levy + Wage Garnishment Levies & Settle Tax Debt NOW + File Back Taxes + Former IRS + Los Angles + 90077, 90049, 90094, 90024, 90064
by Jim Magary | Sep 14, 2015 | Tax Help
As Former IRS Agents we can quickly remove a tax levy or garnishment and settle your case ASAP, Since 1982. Experts
We can get your IRS bank tax levy, IRS wage garnishment levy released within a 24-hour period of time and close your case at the same time. Since 1982, A plus rated.
We have a combined 60 years of direct work experience in the local, district, and regional tax offices of the Internal Revenue Service and know exactly how to settle your case with the Internal Revenue Service.
We are comprised of tax attorneys, CPAs, and former IRS and state tax agents.
As former IRS agents we taught tax law and tax procedure to new IRS agents, we know the system inside and out.
We can stop IRS tax levies and settle your case at the same time. You will never have to speak to the Internal Revenue Service.
We have an immaculate and sterling reputation. Check out our Better Business Bureau rating.
Within 24 hours of receiving your fully documented financial statement we guarantee that you will have a release of your IRS bank levy or wage garnishment levy.
The Settling of IRS Tax Debt
The only way you can settle your tax debt with the Internal Revenue Service is through the offer in compromise program.
As a former IRS agent I not only work the program was but was a teaching instructor. I know the system inside and out.
Our firm will not submit an offer in compromise until we walked through the offer in compromise pre-qualifier tool to make sure that you can settle your tax debt for pennies on dollar.
The Internal Revenue Service accepted 38,000 offers in compromise last year for average of $6500 per settlement.
Last year there were 78,000 offers in compromise filed.
Please keep in mind this is a national average. Your current financial statement will determine the outcome for this program.
Taxpayers should be aware that there is a pre-qualifier tool for the offer in compromise program.
IRS Tax Levy, IRS Wage Garnishment Releases and Removals and Case closing.
The IRS filed 1.8 million the bank and wage garnishment levies last year. IRS filed over 700,000 federal tax liens. The IRS is serious about enforcement on back taxes.
Before IRS will release a tax levy, a wage garnishment or bank seizure, Internal Revenue Service will need a current documented financial statement. Your financial statement is the key to closing your case and settling your case.
If your case is in the automatic collection system, you will be filling out and documenting form 433F which you can find directly on our website. It is the only form the Internal Revenue Service will use.
When calling our office we will complete the form, speak to the Internal Revenue Service and within 24 hours of having your fully documented financial statement we can get your IRS tax levy released.
If the cases are in the local IRS office form 433 a will be required and a much more detailed investigation will be made on your current financial statement.
If this is the case a revenue officer out of the local office will be looking at your case.
The filling out of your financial statement is critical into the settlement of your case.
With that current financial statement you will need to provide IRS the last three months of your bank statements, copies of your pay stubs and your monthly expenses.
IRS does a thorough review of your financial statement therefore you want to make sure you are both honest and accurate. IRS has the ability to go back as far as they want for their financial review. 3 to 6 months is a general indicator of IRS’s review process.
As a general rule, IRS will not release your levy until all your tax returns are filed. We can get your tax returns filed within a matter of days.
We can prepare all your back tax returns with little or no records.
Internal Revenue Service usually closes your case off the enforcement two general ways: Based on your current financial statement, IRS will put you in a currently uncollectible file or put you in a payment agreement.
Over 40% of collection cases wind up in a current tax hardship and 6.5 million other taxpayers are put into monthly installment payment plans.
IRS may fail to release an IRS tax levy wage garnishment or bank levy because taxpayers have failed to file back tax returns.
After the review of your IRS financial statement we can let you know whether you are a possible debt settlement candidate for the offer in compromise program.
REMOVE IRS Tax Levy Help NOW + Wage Garnishments + Settle IRS Tax Debt NOW + Tax Returns File + FAST AFFORDABLE
by Jim Magary | Sep 14, 2015 | Tax Help
What is Cancellation of Debt?
If you borrow money and the lender later cancels or forgives the debt, you may have to include the cancelled amount in income for tax purposes, depending on the circumstances.
When you borrowed the money you were not required to include the loan proceeds in income because you had an obligation to repay the lender.
When that obligation is subsequently forgiven, the amount you received as loan proceeds is normally reportable as income because you no longer have an obligation to repay the lender.
The lender is usually required to report the amount of the canceled debt to you and the IRS on a Form 1099-C, Cancellation of Debt.
Here’s a very simplified example.
You borrow $10,000 and default on the loan after paying back $2,000.
If the lender is unable to collect the remaining debt from you, there is a cancellation of debt of $8,000, which generally is taxable income to you.
Is Cancellation of Debt income always taxable?
Not always. There are some exceptions. The most common situations when cancellation of debt income is not taxable involve:
Qualified principal residence indebtedness: This is the exception created by the Mortgage Debt Relief Act of 2007 and applies to most homeowners.
Bankruptcy: Debts discharged through bankruptcy are not considered taxable income.
Insolvency: If you are insolvent when the debt is cancelled, some or all of the cancelled debt may not be taxable to you. You are insolvent when your total debts are more than the fair market value of your total assets.
Certain farm debts: If you incurred the debt directly in operation of a farm, more than half your income from the prior three years was from farming, and the loan was owed to a person or agency regularly engaged in lending, your cancelled debt is generally not considered taxable income.
Non-recourse loans: A non-recourse loan is a loan for which the lender’s only remedy in case of default is to repossess the property being financed or used as collateral. That is, the lender cannot pursue you personally in case of default. Forgiveness of a non-recourse loan resulting from a foreclosure does not result in cancellation of debt income. However, it may result in other tax consequences.
These exceptions are discussed in detail in Publication 4681.
What is the Mortgage Forgiveness Debt Relief Act of 2007?
The Mortgage Forgiveness Debt Relief Act of 2007 was enacted on December 20, 2007 (see News Release IR-2008-17).
Generally, the Act allows exclusion of income realized as a result of modification of the terms of the mortgage, or foreclosure on your principal residence.
What does exclusion of income mean?
Normally, debt that is forgiven or cancelled by a lender must be included as income on your tax return and is taxable.
But the Mortgage Forgiveness Debt Relief Act allows you to exclude certain cancelled debt on your principal residence from income.
Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.
Does the Mortgage Forgiveness Debt Relief Act apply to all forgiven or cancelled debts?
No. The Act applies only to forgiven or cancelled debt used to buy, build or substantially improve your principal residence, or to refinance debt incurred for those purposes. In addition, the debt must be secured by the home.
This is known as qualified principal residence indebtedness. The maximum amount you can treat as qualified principal residence indebtedness is $2 million or $1 million if married filing separately.
Does the Mortgage Forgiveness Debt Relief Act apply to debt incurred to refinance a home?
Debt used to refinance your home qualifies for this exclusion, but only to the extent that the principal balance of the old mortgage, immediately before the refinancing, would have qualified. For more information, including an example, see Publication 4681.
How long is this special relief in effect?
It applies to qualified principal residence indebtedness forgiven in calendar years 2007 through 2014.
Is there a limit on the amount of forgiven qualified principal residence indebtedness that can be excluded from income?
The maximum amount you can treat as qualified principal residence indebtedness is $2 million ($1 million if married filing separately for the tax year), at the time the loan was forgiven. If the balance was greater, see the instructions to Form 982 and the detailed example in Publication 4681.
If the forgiven debt is excluded from income, do I have to report it on my tax return?
Yes. The amount of debt forgiven must be reported on Form 982 and this form must be attached to your tax return.
Do I have to complete the entire Form 982?
No. Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Adjustment), is used for other purposes in addition to reporting the exclusion of forgiveness of qualified principal residence indebtedness.
If you are using the form only to report the exclusion of forgiveness of qualified principal residence indebtedness as the result of foreclosure on your principal residence, you only need to complete lines 1e and 2.
If you kept ownership of your home and modification of the terms of your mortgage resulted in the forgiveness of qualified principal residence indebtedness, complete lines 1e, 2, and 10b. Attach the Form 982 to your tax return.
Where can I get this form?
If you use a computer to fill out your return, check your tax-preparation software.
You can also download the form at IRS.gov, or call 1-800-829-3676. If you call to order, please allow 7-10 days for delivery.
How do I know or find out how much debt was forgiven?
Your lender should send a Form 1099-C, Cancellation of Debt.
The amount of debt forgiven or cancelled will be shown in box 2.
If this debt is all qualified principal residence indebtedness, the amount shown in box 2 will generally be the amount that you enter on lines 2 and 10b, if applicable, on Form 982.
Can I exclude debt forgiven on my second home, credit card or car loans?
Not under this provision. Only cancelled debt used to buy, build or improve your principal residence or refinance debt incurred for those purposes qualifies for this exclusion. See Publication 4681 for further details.
If part of the forgiven debt doesn’t qualify for exclusion from income under this provision, is it possible that it may qualify for exclusion under a different provision?
Yes. The forgiven debt may qualify under the insolvency exclusion.
Normally, you are not required to include forgiven debts in income to the extent that you are insolvent. You are insolvent when your total liabilities exceed your total assets.
The forgiven debt may also qualify for exclusion if the debt was discharged in a Title 11 bankruptcy proceeding or if the debt is qualified farm indebtedness or qualified real property business indebtedness.
If you believe you qualify for any of these exceptions, see the instructions for Form 982. Publication 4681 discusses each of these exceptions and includes examples.
I lost money on the foreclosure of my home. Can I claim a loss on my tax return?
No. Losses from the sale or foreclosure of personal property are not deductible.
If I sold my home at a loss and the remaining loan is forgiven, does this constitute a cancellation of debt?
Yes. To the extent that a loan from a lender is not fully satisfied and a lender cancels the unsatisfied debt, you have cancellation of indebtedness income.
If the amount forgiven or canceled is $600 or more, the lender must generally issue Form 1099-C, Cancellation of Debt, showing the amount of debt canceled.
However, you may be able to exclude part or all of this income if the debt was qualified principal residence indebtedness, you were insolvent immediately before the discharge, or if the debt was canceled in a title 11 bankruptcy case.
If the remaining balance owed on my mortgage loan that I was personally liable for was canceled after my foreclosure, may I still exclude the canceled debt from income under the qualified principal residence exclusion, even though I no longer own my residence?
Yes, as long as the canceled debt was qualified principal residence indebtedness. See Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonment.
Will I receive notification of cancellation of debt from my lender?
Yes. Lenders are generally required to send Form 1099-C, Cancellation of Debt, when they cancel any debt of $600 or more. The amount cancelled or deemed discharged will be in box 2 of the form.
What if I disagree with the amount in box 2?
Contact your lender to work out any discrepancies and have the lender issue a corrected Form 1099-C.
How do I report the forgiveness of debt that is excluded from gross income?
(1) Check the appropriate box under line 1 on Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) to indicate the type of discharge of indebtedness and enter the amount of the discharged debt excluded from gross income on line 2. Any remaining canceled debt must be included as income on your tax return.
(2) File Form 982 with your tax return.
My student loan was cancelled; will this result in taxable income?
In some cases, yes. Your student loan cancellation will not result in taxable income if you agreed to a loan provision requiring you to work in a certain profession for a specified period of time, and you fulfilled this obligation.
Are there other conditions I should know about to exclude the cancellation of student debt?
Yes, your student loan must have been made by:
(a) the federal government, or a state or local government or subdivision;
(b) a tax-exempt public benefit corporation which has control of a state, county or municipal hospital where the employees are considered public employees; or
(c) a school which has a program to encourage students to work in underserved occupations or areas, and has an agreement with one of the above to fund the program, under the direction of a governmental unit or a charitable or educational organization.
Can I exclude cancellation of credit card debt?
In some cases, yes. Non-business credit card debt cancellation can be excluded from income if the cancellation occurred in a title 11 bankruptcy case, or to the extent you were insolvent just before the cancellation. See the examples in Publication 4681.
How do I know if I was insolvent?
You are insolvent when your total debts exceed the total fair market value of all of your assets. Assets include everything you own, e.g., your car, house, condominium, furniture, life insurance policies, stocks, other investments, or your pension and other retirement accounts.
How should I report the information and items needed to prove insolvency?
Use Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) to exclude canceled debt from income to the extent you were insolvent immediately before the cancellation.
You were insolvent to the extent that your liabilities exceeded the fair market value of your assets immediately before the cancellation.
To claim this exclusion, you must attach Form 982 to your federal income tax return. Check box 1b on Form 982, and, on line 2, include the smaller of the amount of the debt canceled or the amount by which you were insolvent immediately prior to the cancellation. You must also reduce your tax attributes in Part II of Form 982.
My car was repossessed and I received a 1099-C; can I exclude this amount on my tax return?
Only if the cancellation happened in a title 11 bankruptcy case, or to the extent you were insolvent just before the cancellation. See Publication 4681 for examples.
