Foreclosure after Divorce

[hmc8982]

What is the name of your state (only U.S. law)? Indiana

I went through a divorce over a 2 years ago. My ex husband was awarded the house we owned together. In that time he stopped making payments and allowed it to go into foreclosure. It foreclosed on.. and while it was his responsibility.. I realize that with my name on it there was little I could do to stop it from ruining my credit.. so i've come to terms with that. But now it's tax time.. and I just got my w-2 so I'm wanting to file. I've been told I wouldn't have to worry about it... since he was repsonsible.. he's the one who has to file it on his taxes or whatever.... we were not able to do the deed in lieu or whatever and give it back.. they didn't let us.. so it was just a regular foreclosure. It was sold in the sherrif's auction in mid december. I just wanted to make sure this was true.. and that I"m good to go to file my taxes...and get them done.

Thanks,
Heather

 

[LdiJ]

What is the name of your state (only U.S. law)? Indiana

I went through a divorce over a 2 years ago. My ex husband was awarded the house we owned together. In that time he stopped making payments and allowed it to go into foreclosure. It foreclosed on.. and while it was his responsibility.. I realize that with my name on it there was little I could do to stop it from ruining my credit.. so i've come to terms with that. But now it's tax time.. and I just got my w-2 so I'm wanting to file. I've been told I wouldn't have to worry about it... since he was repsonsible.. he's the one who has to file it on his taxes or whatever.... we were not able to do the deed in lieu or whatever and give it back.. they didn't let us.. so it was just a regular foreclosure. It was sold in the sherrif's auction in mid december. I just wanted to make sure this was true.. and that I"m good to go to file my taxes...and get them done.

Thanks,
Heather

Was he first on the mortgage? If so, the 1099A or C is going to get issued under his social security number, therefore it should not effect your taxes.

However, even if somehow it got issued under your SSN, its cancelation of debt from a mortgage for a primary residence, therefore its excludable from income for tax purposes.

 

[nextwife]

Was he first on the mortgage? If so, the 1099A or C is going to get issued under his social security number, therefore it should not effect your taxes.

However, even if somehow it got issued under your SSN, its cancelation of debt from a mortgage for a primary residence, therefore its excludable from income for tax purposes.

I prepare bank 1099 worksheets each year on our foreclosed properties, and we put both social security numbers and both borrowers on the form. Both get reported. Co-borrowers are equally responsible, and the "order" in which we type them onto the mortgage documents is is irrelevant. We are not obligated to place one or the other borrower on the "top line" when completing 1099 write ups. I simply type it up showing either one first- not based on any order.

 

[LdiJ]

I prepare bank 1099 worksheets each year on our foreclosed properties, and we put both social security numbers and both borrowers on the form. Both get reported. Co-borrowers are equally responsible, and the "order" in which we type them onto the mortgage documents is is irrelevant. We are not obligated to place one or the other borrower on the "top line" when completing 1099 write ups. I simply type it up showing either one first- not based on any order.

It makes sense that you would do that for the worksheets, but less sense that you would/could change the order of the names at will.

Are you sure that both SSNs appear on the actual 1099s? I have never seen one that included more than one SSN, and I know that the IRS's systems are not set up to handle double SSNs on a 1099. Something like that would kick them out of the automated matching system and the cancelled debt would end up not getting tied to EITHER SSN.

In any case, it doesn't change the fact that cancelled debt from a mortgage for a primary residence is excludable from income.

 

[nextwife]

It makes sense that you would do that for the worksheets, but less sense that you would/could change the order of the names at will.

Are you sure that both SSNs appear on the actual 1099s? I have never seen one that included more than one SSN, and I know that the IRS's systems are not set up to handle double SSNs on a 1099. Something like that would kick them out of the automated matching system and the cancelled debt would end up not getting tied to EITHER SSN.

In any case, it doesn't change the fact that cancelled debt from a mortgage for a primary residence is excludable from income.

The order of appearance for coborrowers is meaningless and usually arbitrary. The 1099 worksheets are generated off the computer system, and one doesn't even see the actual mortgage and note when they prepare it. The systems are alphabetical by last, then first name, and each borrower has an entry. If she appears further up the list than he (say her name is Alice and his is Xavier), she gets inserted into the form first because she gets picked up first.

 

[LdiJ]

The order of appearance for coborrowers is meaningless and usually arbitrary. The 1099 worksheets are generated off the computer system, and one doesn't even see the actual mortgage and note when they prepare it. The systems are alphabetical by last, then first name, and each borrower has an entry. If she appears further up the list than he (say her name is Alice and his is Xavier), she gets inserted into the form first because she gets picked up first.

Ok...that's interesting, but a bit odd.

However, I can guarantee that only one borrower's name and SSN show up on a 1099C, and that your company cannot issue two 1099Cs for the same debt. A 1099C performs an accounting function as well and a two 1099Cs on the same debt would generate an accounting "double dip" for the company.

Every 1099C I have ever seen, in 25 years of being in the tax business, has always appeared in the name of whomever appeared first on any other bills or documents related to the mortgage. I have NEVER seen a reversal of that order.