Cancellation of Debt

[lostie]

What is the name of your state (only U.S. law)?
Hi! I live in Missouri & my daughter received a COD form 1099-C for the amount of $702.53 debt cancellation. I really don't want my husband finding out about this(I would never hear the end of it!). He likes to get her taxes done at the same time as ours. He just wants to make sure she has everything together, etc. She is 30 years old, has a 1 year old & I think it is time she do it on her own. She does, too.
What I need to know is this~DOES she have to include this form with her tax info & is it going to be a big blow to her tax refund?
She got into a little bind with paying her credit cards, etc. She is solvent. No problem there. She had all of her credit debts consolidated & she was under the impression that this one credit card company had agreed to this, also. Nope.
I know, I know. What a dummy she is! Her dad doesn't know about the consolidation. Oy!
ANYway, I have been lying awake nights thinking about how he is going to react to this if he ever finds out about it.
I have read that it is supposed to be filed as 'extra income'. Is it the amount OVER $600 that is taxable, or the total amount I listed?
If anyone can answer these questions, thanx in advance!
Sincerely,
A very worried mommy

 

[Antigone*]

What is the name of your state (only U.S. law)?
Hi! I live in Missouri & my daughter received a COD form 1099-C for the amount of $702.53 debt cancellation. I really don't want my husband finding out about this(I would never hear the end of it!). He likes to get her taxes done at the same time as ours. He just wants to make sure she has everything together, etc. She is 30 years old, has a 1 year old & I think it is time she do it on her own. She does, too.
What I need to know is this~DOES she have to include this form with her tax info & is it going to be a big blow to her tax refund?
She got into a little bind with paying her credit cards, etc. She is solvent. No problem there. She had all of her credit debts consolidated & she was under the impression that this one credit card company had agreed to this, also. Nope.
I know, I know. What a dummy she is! Her dad doesn't know about the consolidation. Oy!
ANYway, I have been lying awake nights thinking about how he is going to react to this if he ever finds out about it.
I have read that it is supposed to be filed as 'extra income'. Is it the amount OVER $600 that is taxable, or the total amount I listed?
If anyone can answer these questions, thanx in advance!
Sincerely,
A very worried mommy

If she does not include that as income on her taxes is will be opening a Pandora's Box.

The IRS will send your daughter a nice little letter saying "hey...you've been selected for an audit".

Mommy needs to let her 30-year old baby take it like a woman.

 

[irsos]

What is the name of your state (only U.S. law)?
Hi! I live in Missouri & my daughter received a COD form 1099-C for the amount of $702.53 debt cancellation. I really don't want my husband finding out about this(I would never hear the end of it!). He likes to get her taxes done at the same time as ours. He just wants to make sure she has everything together, etc. She is 30 years old, has a 1 year old & I think it is time she do it on her own. She does, too.
What I need to know is this~DOES she have to include this form with her tax info & is it going to be a big blow to her tax refund?
She got into a little bind with paying her credit cards, etc. She is solvent. No problem there. She had all of her credit debts consolidated & she was under the impression that this one credit card company had agreed to this, also. Nope.
I know, I know. What a dummy she is! Her dad doesn't know about the consolidation. Oy!
ANYway, I have been lying awake nights thinking about how he is going to react to this if he ever finds out about it.
I have read that it is supposed to be filed as 'extra income'. Is it the amount OVER $600 that is taxable, or the total amount I listed?
If anyone can answer these questions, thanx in advance!
Sincerely,
A very worried mommy

Well, it is not going to open up Pandora's Box but if her return is not changed, it will cause her to get a notice in about a year advising her that she has left income off the return. The tax should not be but $70 to $175.

She needs to amend the return by 04/15. She can do this by having another return prepared including the omitted income. Technically an amended return is not required if the corrected return is mailed by 04/15/09.

She can ignore the 1099-C and simply pay the bill a year or so from now when the notice is received, but she will incur interest and penalties.

 

[LdiJ]

I think that your daughter needs to say "dad, I appreciate your concern but I am 30 years old and I believe its time that I handle my own taxes".

 

[davew128]

I think that your daughter needs to say "dad, I appreciate your concern but I am 30 years old and I believe its time that I handle my own taxes".

Maybe not so diplomatically....