- February 4, 2022
There are many different 1099 Forms that are used for information return for the IRS. These Forms report different incomes that one receives during the year. Form 1099-A is used to report information pertaining to the acquisition or the abandonment of secured property and is also used to report foreclosure on a property. Abandonment happens when the borrower permanently or intentionally abandons the property.
Who will receive Form 1099-A?
Taxpayers will receive this Form if the mortgage lender foreclosed on the property or canceled some or all of the mortgage or even sold the property in a short term. Those who have more than one mortgage on the foreclosed property can expect to receive a separate 1099-A Form from each lender. Since canceled debt is also considered as income, Form 1099-A should be used to report this income to the IRS. If you have borrowed money as a mortgage from a lender to purchase a home, and at some point, you were not able to make payments, then these withheld payments are also considered as income by the IRS and this income could also be taxable.
When to use Form 1099 A?
Generally, the mortgage lender will fill out and file Form 1099-A with the IRS. They will also send a copy of this Form to all the borrowers that are listed on the foreclosed loan. Each of the borrowers should report the information given in the form of their personal tax returns. The lender will generally send a copy of Form 1099-A to the recipient before January 31st. They should also send a copy of the Form to the IRS before February 28th of the same tax year.
What information is reported in Form 1099-A?
When a property is either abandoned or foreclosed, it will be treated as a sale from a tax standpoint. IRS Form 1099-A will provide information on both the selling price and the date of sale of the property. The taxpayers will either use the fair market value of the property or the outstanding loan balance on the property to calculate the selling price. And both these values will be reported on the tax Form 1099-A. The outstanding loan balance will be reported in Box 2 of Form 1099-A and the fair market price of the property will get reported in Box 4 of the IRS tax Form.
The left top side of the Form will report the information of the Payer and the left lower side of the 1099-A Form will have information pertaining to the taxpayer. The Form will also have either the complete or the last few digits of the SSN printed. Copy A of this form will be sent to the IRS, and Copy B of this Form will be sent to the taxpayer.
If the property securing the loan is either foreclosed or abandoned, and the loan gets canceled, the taxpayer will get only Form 1099C and not 1099-A. This Tax Form is important as in certain circumstances, the property should be treated as if it was sold and the Form checks the authenticity of the information reported in the Form.
E-File 1099 Forms with IRS during Tax Year
