When did they sneak this across?

[randym431]

My neighbors were telling us on this little 1099 form they got in the mail.
They are on SS. No other income. Now they owe a sh*t load of irs taxes.

I never even heard of this before. Guess Fox and Cnn is too busy with Brittney
to inform people what?s really happening in America.

http://www.carreonandassociate...articles/bewareirs.htm

CHARGED OFF (CANCELED) DEBTS AND THE IRS
If your debt has been written off by a creditor then you may receive a 1099-c from the source. You must claims this amount as income on your taxes because you never paid it back- thus making it income.

 

[bsobel]

Originally posted by: randym431
My neighbors were telling us on this little 1099 form they got in the mail.
They are on SS. No other income. Now they owe a sh*t load of irs taxes.

I never even heard of this before. Guess Fox and Cnn is too busy with Brittney
to inform people what?s really happening in America.

http://www.carreonandassociate...articles/bewareirs.htm

CHARGED OFF (CANCELED) DEBTS AND THE IRS
If your debt has been written off by a creditor then you may receive a 1099-c from the source. You must claims this amount as income on your taxes because you never paid it back- thus making it income.

Its been like this for some time. It means your neighbors defaulted on bills (money they owed) and they bill was forgiven, its treated as income.

 

[rpanic]

I just got one of those, first time. It says "total interest paid or credited" 50.12 and doesn't say anything else like why or where the 50.12 is from.

 

[bsobel]

Originally posted by: rpanic
I just got one of those, first time. It says "total interest paid or credited" 50.12 and doesn't say anything else like why or where the 50.12 is from.

Its from the person who sent you the 1099.
Bill

 

[Slew Foot]

Yeah, when you default on a debt and the creditor takes the hit, you get a 1099 for the balance that you never paid up. Sounds fair to me.

 

[Soundmanred]

Originally posted by: Slew Foot
Yeah, when you default on a debt and the creditor takes the hit, you get a 1099 for the balance that you never paid up. Sounds fair to me.

That's how I feel. Some kind of warning would have been nice though...

 

[bsobel]

Originally posted by: Soundmanred

Originally posted by: Slew Foot
Yeah, when you default on a debt and the creditor takes the hit, you get a 1099 for the balance that you never paid up. Sounds fair to me.

That's how I feel. Some kind of warning would have been nice though...

I sure they where told whent he debt was discharged and missed it or didnt understand it.

 

[Soundmanred]

That's pretty likely too. They were probably too excited that they didn't have to pay up. I guess they should be glad they are only paying a percentage of what they originally owed.

 

[EagleKeeper]

Usually the 1099-c is when more than 20% of the debt is lost.

ie. You owe $100 and agree to settle/pay $80 - you get the 1099-c
You owe $100 and settle/pay $81 - no 1099-c

 

[randym431]

I don't want to get into reasons for their debt. They are in their 80's and at one time took care of their grand kids. That was very hard on them money wise. All I know is that old people on SS income should NEVER be sent credit card offers in the first place. What gets me is this unsecured debt legally turned into a tax debt by a shady deal between the banks and the fed gov.

 

[palehorse]

Originally posted by: randym431
I don't want to get into reasons for their debt. They are in their 80's and at one time took care of their grand kids. That was very hard on them money wise. All I know is that old people on SS income should NEVER be sent credit card offers in the first place. What gets me is this unsecured debt legally turned into a tax debt by a shady deal between the banks and the fed gov.

their tax debt is not likely to be anywhere near as high as their original debt was -- so this is the price they have to pay for erasing the entire debt that they accumulated.

It may be true that some companies pray on the elderly, but at what age do you want people to stop being responsible for their own poor choices? 70? 75? 84? [insert arbitrary number here]...?

 

[bsobel]

Originally posted by: randym431
I don't want to get into reasons for their debt. They are in their 80's and at one time took care of their grand kids. That was very hard on them money wise. All I know is that old people on SS income should NEVER be sent credit card offers in the first place. What gets me is this unsecured debt legally turned into a tax debt by a shady deal between the banks and the fed gov.

Shady deal? WTF. They got money which they never repaid, therefore it became income, their fault 100%

 

[EagleKeeper]

Originally posted by: randym431
I don't want to get into reasons for their debt. They are in their 80's and at one time took care of their grand kids. That was very hard on them money wise. All I know is that old people on SS income should NEVER be sent credit card offers in the first place. What gets me is this unsecured debt legally turned into a tax debt by a shady deal between the banks and the fed gov.

The banks are required by law to report any debt relief tat results in a loss above the cutoff percentage.

1) Who twisted their arm to take the Credit Cards?

2) Who decided to forgive some or all of the debt.

As others stated, they chose to take the money and then not pay it.

Yet you blame the bank that lent them the money.

Self responsibility/accountability is the problem here

 

[Wheezer]

Originally posted by: Common Courtesy

Originally posted by: randym431
I don't want to get into reasons for their debt. They are in their 80's and at one time took care of their grand kids. That was very hard on them money wise. All I know is that old people on SS income should NEVER be sent credit card offers in the first place. What gets me is this unsecured debt legally turned into a tax debt by a shady deal between the banks and the fed gov.

The banks are required by law to report any debt relief tat results in a loss above the cutoff percentage.

1) Who twisted their arm to take the Credit Cards?

2) Who decided to forgive some or all of the debt.

As others stated, they chose to take the money and then not pay it.

Yet you blame the bank that lent them the money.

Self responsibility/accountability is the problem here

amen!....accountability has been flushed down the crapper these days.

 

[JD50]

Seeing as the OP has accused all "Hillary haters" of beating their wife, I'm not too surprised at the stupidity of this thread.

 

[Thump553]

This has been the law since at least the eighties, probably much longer. Basically the rule is forgiven debt = taxable income, which is perfectly logical.

The people that really get bitten by this are those that lose their home in foreclosure where the debt forgiveness (after foreclosure expenses are added on) can easily be five or six figures, so expect to see a lot more of this popping up.

Tell them to do some tax research or talk to a tax expert, for as I recall there is an insolvency exception to this rule of imputed income. Further, if they file bankruptcy (probably not for your neighbors, but more for people foreclosed upon) insolvency is presumed so no more tax issue.

<--not giving tax or legal advice, just pointing out some possibilities

 

[DAPUNISHER]

Originally posted by: Wheezer

Originally posted by: Common Courtesy

Originally posted by: randym431
I don't want to get into reasons for their debt. They are in their 80's and at one time took care of their grand kids. That was very hard on them money wise. All I know is that old people on SS income should NEVER be sent credit card offers in the first place. What gets me is this unsecured debt legally turned into a tax debt by a shady deal between the banks and the fed gov.

The banks are required by law to report any debt relief tat results in a loss above the cutoff percentage.

1) Who twisted their arm to take the Credit Cards?

2) Who decided to forgive some or all of the debt.

As others stated, they chose to take the money and then not pay it.

Yet you blame the bank that lent them the money.

Self responsibility/accountability is the problem here

amen!....accountability has been flushed down the crapper these days.

That's because it is so much easier to point the finger at someone else. Many Americans don't do "Hard" "difficult" or any of those other unsavory terms such as integrity, responsibility, prudence, or especially any form of that most dreaded of terms....Math!

I recall as a child, we were shown films through elementary and middle school that instructed us on different life lessons, believe it or not, useful ones, guess that program funding was slashed eh? They taught us everything from safety, to avoiding manipulation by our peers, to understanding why it felt good to climb the rope in gym class Man did I ramble off on a tangent there or what!

 

[StageLeft]

It sucks for them, but I have heard of it before. I think we need to take all elderly and put them on a mandatory allowance scheme. In fact, let's give all adults a test and if they cannot score at least 80% on it (a test of basic finance, coving debt, interest rates, common tax concepts, etc.), their pay checks get sent to an intermediary and they will get vouchers for things like food and need pre-approval to spend their money on anything else. Perhaps to minimize legislative overhead they can get a small stipend of, say, $50/week to cover things like a packet of gum or movie rental.

 

[DAPUNISHER]

Originally posted by: Skoorb
It sucks for them, but I have heard of it before. I think we need to take all elderly and put them on a mandatory allowance scheme. In fact, let's give all adults a test and if they cannot score at least 80% on it (a test of basic finance, coving debt, interest rates, common tax concepts, etc.), their pay checks get sent to an intermediary and they will get vouchers for things like food and need pre-approval to spend their money on anything else. Perhaps to minimize legislative overhead they can get a small stipend of, say, $50/week to cover things like a packet of gum or movie rental.

Can we take the cost of the program out of their SS check? Being serious for a moment, but only a moment, I am unable to see how yet more bureaucracy would be a good solution.

 

[piasabird]

Let them sell their house.

I have been considering it. After this housing crunch gets settled I may just do that. It has become more of liability than a benefit. Soon as I get the kids out of the house, I think I am going to downsize. I could handle a one room apartment about now. Less to heat, less to clean, less things to break.

Overall I look at the landscape of America and I see a country of Excess. If it hurts too much we are suppose to tighten our belt, not go get a 2nd and 3rd mortgage. Sooner or later you have to pay your bills.

If you feel bad for these people just offer to send them $500.00 from your paycheck every month. Let their kids support them.

 

[jandrews]

seems fair to me to tell the truth. Also, I dont really get why people think social security is for their retirements. It was created for people who lost their pensions or their spouse with the pension would still have something to live on. It sucks when people dont save their money but if we just gave every old person on social security handouts for not planning ahead we would be in much worse shape than even today.

 

[rpanic]

Originally posted by: bsobel

Originally posted by: rpanic
I just got one of those, first time. It says "total interest paid or credited" 50.12 and doesn't say anything else like why or where the 50.12 is from.

Its from the person who sent you the 1099.
Bill

I think it?s from being over paid interest from past year on refund. Does that make sense I would think they would just send a bill. It doesn?t say who it is from aside from the IRS.

 

[Moonbeam]

I don't see the problem. Just borrow the money, pay the IRS, and don't repay the loan.

 

[Vic]

This is nothing new. As old as the income tax itself probably. If a bank lends you money (meaning you actually take the money), you default on the loan, and the bank charges off the debt (meaning you no longer have to pay it back), then the bank is required to report that money to the IRS as income. Because that's what it was, now wasn't it? I feel for these poor old folks in the OP, but that's almost certainly what happened. They got money at some point that they didn't have to pay back later. That's income by definition. Get rid of this and you'd have the biggest tax loophole ever.

As for the comment that "old people on SS income should NEVER be sent credit card offers in the first place," such practices would be a direct violation of the Equal Credit Opportunity Act (ECOA) which explicitly prohibits discrimination in lending on the basis of age or refusal to consider income like Social Security.

 

[Lemon law]

Its one of the many issues involved in debt collection. The point being, debt collectors can but are not obligated to issue these 1099's. So its often only motivated by revenge. And given the track record and poor documentation of large junk debt buyers like asset acceptance, their 1099 is not worth the paper its printed on. But the IRS loves it because then you are basically fighting city hall. To collect the debt, the burden of proof is on the junk debt buyer. But to beat the 1099, the burden of proof is on the individual.

Anyone who knows anything about debt collection issues regards these junk debt buyers as the scum of the earth. And to put their 1099's on the same footing as legitimate debt collectors with the documentation to back their claims is a crime IMHO.

Since we don't know much about the circumstances of this actual case, I merely suggest this too may be a possibility.