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Seriously wants to cry!

January 29th, 2012 at 06:02 pm

Told you guys our taxes were bad this year....we owed close to $4k bc we messed up our elections. Well, there is more to that sad story now. And it is really sad.

Several years ago we did a stupid thing and sold a house to a couple of sleaze bags who turned out to be criminals. We did a promissory note for a year where we carried the note and they were supposed to get their own financing at the end of the year. We did it all correctly, had a contract drawn, full closing, deeded property to them, etc. A year later they bail on the house that they trashed out, told us we could "have it back" even though it was theirs....and never paid property taxes or anything. At that time my husband wasn't working so we had 2 choices...either save our current house or possibly lose both if we try to save both. We couldn't afford both so we tried to work with the bank. This was before the housing crash so the bank was not interested in working with us at all....we did the entire bit where we submit our package of paper, they lose it 5 times, then it is outdated, we submit more, they lose it some more, etc. after several months of getting no where and losing a short sale buyer bc of the bank's inability to function, we told them to kiss our a$$ and do whatever they want with the house. We were through dealing with below average intelligence. So the house is foreclosed on, we get sued and we settle the debt with a cash payment. The following January, we get a 1099-C with the cancellation of debt amount we have to pay taxes on....which totally ate our lunch! And pissed us off. So we pay it and forge ahead.

Then last Friday afternoon, we get 2 more 1099-C's from this same bank....for the same account, one for me and my husband! Of course I call them and they are closed bc it is 4:00 in the afternoon. So I've had to wait all weekend, fretting & worrying over what this could possibly mean. While I am not surprised if it is an error, I cannot for the life of me understand how this mistake could be made. The form says the debt was cancelled in Oct 2011....but the other form was several years ago says the debt was cancelled in March of that year. So I have no idea what the heck is going on but if by some chance they don't admit this was an error, we will have to get an attorney and fight it. If we put it into our tax return, we will owe over $15k....which is bananas! I called the IRS and they said it was between us and the company....but that if we couldn't get it resolved that I should go ahead and send in the forms with our tax return with an explanation of all that took place.

So I plan to be on the phone with the bank most of tomorrow arguing if necessary....I'm just so worried this thing will go south in a hurry! Please pray for us!

7 Responses to “Seriously wants to cry!”

  1. MonkeyMama Says:

    Actually, I believe cancellation of debt on foreclosure is not taxable. Or does that have to be a primary residence? Is that the rub? REALLY worth consulting a tax expert on the manner. I am a tax preparer and thought those were not taxable through 2011 or 2012. (I haven't had any foreclosed clients so don't know the details off the top of my head - just know the government was being very generous on not taxing this for several years).

  2. MonkeyMama Says:

    Okay - I was just double checking and since it was a second home, that is the issue. Sounds like you haven't lived in it for more than 3 years? Regionally, most people in this situation are also totally insolvent so get a free pass. So my perception is most people aren't paying taxes on this.

    I hope you get it all squared away! Sorry you have to deal with this.

  3. Big saver! Says:

    It is not taxable if it is your primary residence...in this case we were not living in the house at the time of foreclosure so we were stuck with it. The issue is that we already paid the taxes on this blasted thing so I can't figure out why we are getting 2 more 1099-C forms this year....several years later!

  4. Thrifty Ray Says:

    Good luck with this. I can understand why you would be completely frustrated at this point. I hope it works out ok.

  5. creditcardfree Says:

    Good luck with your phone call tomorrow!! I hope this has a better ending for you.

  6. Amber Says:

    Oh geez I wish I could help, I have my fingers crossed as well as praying that this is an error. Good luck

  7. Bob B. Says:

    Sorry for your situation. We've got potential for a similar situation. We've not lived in our house for 4 years, and we have the house rented out, and the poeople are "interested" in buying, but they're not sure if they can get financing...

    Actually, we had the house rented out to another set of renters a year ago. They wanted to buy the house on land contract. The whole deal seemed fishy, so we backed out. Reading your post makes me glad we did, and will make me even more cautious when dealing with the new renters.

    Hope this all works out for you.

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