What is a 1099-A Form?
The 1099-A form is one of the forms used to report income to the United States Internal Revenue Service (IRS). The 1099-A form is usually used to help taxpayers accurately report a home foreclosure on that year's federal income tax return. This form is normally issued when a homeowner fails to make timely payments on a home loan, and the lender repossesses the house. For tax purposes, the IRS considers the loss of a home to foreclosure to be equivalent to the sale of the same home. The 1099-A form generally helps establish a fair market value, sale price, and date of sale for the home, so that the taxpayer can declare a gain or a loss when reporting the home foreclosure to the IRS.
The United States IRS 1099-A form is just one of the several 1099 forms used to help report non-employee forms of income to the Internal Revenue Service. Taxpayers are generally expected to include copies of any 1099 forms when filing that year's federal income tax return. The 1099-A form is generally filed when secured property, or property that has been offered as collateral for a loan, is repossessed by a lender. This form isn't always filed when secured property is abandoned, but is usually reserved for the repossession of real estate property. Failure to pay personal property loans, such as automobile loans, often doesn't result in the issuance of a 1099-A.
The typical 1099-A form contains several important items of information. The lender's contact information is usually listed, as is the borrower's. Taxpayer identification numbers and any relevant account numbers are also normally listed on the form.
Additional information that generally appears on the 1099-A form includes the date upon which the lender repossessed the property, and the amount of money still owed on the property at the time of repossession. The property's fair market value is generally included. A brief description of the property might be included, and the lender will usually indicate whether the listed borrower was personally responsible for repayment of the secured loan.
Taxpayers may typically use the difference between the reported fair market value of the foreclosed property and the remaining balance on the loan to report a gain or loss on that year's federal income tax return. Home foreclosures are normally reported as sales of property, with the foreclosure date standing in as the sale date, and the remaining loan balance standing in as the sale price. Copies of the form are normally issued to both the taxpayer and to the IRS.
Does this mean that the IRS will tax me as if this is income? And what if the fair market value is less then the amount owed?
Does this mean that the debt is forgiven by the lender when they issue a 1099a?
Does that mean that if the Fair Market Value is higher than the amount owed, that the difference would be reported as a loss?
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