Tax Debt Relief – The How To’S
If you want to file for a tax debt relief, there are some steps that you should follow. If you qualified for loan modification, you can qualify for a tax exemption according to the Mortgage Debt Relief Act of 2007. These steps can guide through the process.
Firstly, you should determine if you’re a qualified candidate. When debts are forgiven because of bankruptcy, foreclosure, non-recourse loans, and certain cases of farm debts, you may qualify. The nest step would be to secure the Form 1099-C.
You can get the form from the lender, and it is called Cancellation of Debt. The lender will send the form to you and the forgiven amount can be seen inside box number two. Aside from the Form 1099-C, you will also need to fill out the Form 982 or the Reduction of Tax Attributes Due to Discharge of Indebtedness. Such form is needed when you report to the IRS about the forgiven debt.
For this purpose, you may only need to fill out lines 1e, 2, and 10b. You can also get the form at the website of IRS by downloading it, or you can find it in the tax software. For those who find it hard to get the said form, they can call IRS at (800) 829-3676 and secure a copy.
The last step would be to file the taxes. The taxes can be filed following the normal procedure, but you will include the Form 982 as well as the 1099-C. You should do this before April 15 of the year; however, you can also apply for an extension just in case you haven’t secured the needed forms on time.
Filing for the debt relief is not hard. You can do this on your own, or you can hire a professional to do this on your behalf. You should never make it a habit to incur tax debts.
If you’re knowledgeable enough, you can file on your own but don’t forget to secure the two forms mentioned above. Follow the steps carefully so that the IRS can provide you with a good tax debt relief solution.
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Tags: cancellation of debt, farm debts, form 1099, loan modification, mortgage debt, non recourse loans, relief act, tax debt, tax debts, tax settlement