Taxes can get confusing — just looking at the names of some of the forms you have to fill out can be enough to get your head spinning. Like the 1099-C, for example. What is that, and why is it in your mailbox? Well, we’re here to help and answer all your 1099-C questions.
What Is a 1099-C?
“A 1099-C is a document sent by a bank when they have canceled a debt,” Craig W. Smalley, EA, founder and CEO of CWSEAPA, LLP and Tax Crisis Center, LLC, said. “For instance, if you have negotiated with your credit card company to pay them a lesser amount than you owe them, the difference would be reported on this form.”
Bruce McClary, the vice president of communications at the National Foundation for Credit Counseling, said this is an important reason to “be familiar with the tax consequences when considering debt settlement as an option. You don’t want to be blindsided by a costly IRS bill when you may already be struggling financially.”
Why Did I Get a 1099-C?
If you have had a canceled debt, expect to see a 1099-C arrive in your mail, as “the bank is required to send this form, because it is taxable income,” Smalley said.
According to the IRS, lenders file a 1099-C if you have $600 or more of debt that is canceled. Here are four common reasons that may be the case. ...continue reading
I've never considered moving to Delaware, Montana, New Hampshire or Oregon as a way to avoid paying local or state sales taxes, but I see how it can be tempting — especially to retirees looking to save money.
Other than some local resort areas in Montana, those four states don't have local or state sales taxes, giving residents and visitors plenty of reasons to shop there.
Some states make up for low or zero sales taxes with high income taxes. Oregon has no sales tax but high income taxes, while neighboring Washington state has high sales taxes but no income tax. In theory, it could pay off to live and work in Washington state and buy everything in Oregon.
But which states should you avoid for high sales taxes? The Tax Foundation recently put out a mid-year report of state and local sales tax rates, combining the state and average local sales tax rates for each state.
Highest sales taxes in the Bayou
The full list is in the report, but here's the top 10 states for combined local and state sales tax rates, followed by the combined rate: ...continue reading
Ugh! Tax season. I don't know about you, but I've yet to get started compiling my tax information from 2015 and I'm dreading doing it. I don't even do my own taxes, I hire an accountant and tax prep firm to help me with my income tax return. But even though I don't fill out all the forms myself, I always check things over before I sign the dotted line, and you should too.
Tax professionals can make mistakes just as those who do their own taxes. Mistakes on tax returns are less common now that many people use tax preparation software as those systems are designed to catch mistakes, but there are still plenty of ways you can mess up your taxes. Here are 4 common income tax mistakes to avoid.