Wells Fargo Debt Cancellation

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Oh Sparda, what have you done now? 🙄 What sort of debt did you have cancelled?

Yes, cancelled debt is taxable. Don't even think about ignoring it, because Wells Fargo would've sent a copy to the IRS so they will be looking for it on your tax return. If you don't declare it, the IRS will simply add it on themselves and recalculate your tax bill PLUS penalties and interest.

Read up about debt cancellation and Form 1099-C:
1099-C surprise: Canceled debt often taxable as income
 
pezdispenser said:
Oh Sparda, what have you done now? 🙄 What sort of debt did you have cancelled?

Yes, cancelled debt is taxable. Don't even think about ignoring it, because Wells Fargo would've sent a copy to the IRS so they will be looking for it on your tax return. If you don't declare it, the IRS will simply add it on themselves and recalculate your tax bill PLUS penalties and interest.

Read up about debt cancellation and Form 1099-C:
1099-C surprise: Canceled debt often taxable as income
Click to expand...

Yeah, I got the 1099-C surprise form. Just filed my taxes and I owe about $14000 this year after deductions. The 1099-C form jacked up my income from $98k to $153k.
 
Sparda29 said:
Yeah, I got the 1099-C surprise form. Just filed my taxes and I owe about $14000 this year after deductions. The 1099-C form jacked up my income from $98k to $153k.
Click to expand...

How did you get WF to forgive your debt?


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Jesus, what did you do? Not pay a credit card or something and get it charged off?

1099-C from cancelled debt is taxable income.

If you're talking about the shadow accounts having been opened by WF, did YOU use the account and not pay or did someone else fraudulently use this account and stick you with the charged off balance? If this is fraud, you're gonna have to do a bunch of leg work (police reports, etc..) to get that 1099-C retracted.

Details man!
 
confettiflyer said:
Jesus, what did you do? Not pay a credit card or something and get it charged off?

1099-C from cancelled debt is taxable income.

If you're talking about the shadow accounts having been opened by WF, did YOU use the account and not pay or did someone else fraudulently use this account and stick you with the charged off balance? If this is fraud, you're gonna have to do a bunch of leg work (police reports, etc..) to get that 1099-C retracted.

Details man!
Click to expand...

It's not fraud. I think it's from nonpayment and they gave up trying to collect. (my credit score is ****)
 
Sparda, are you able to claim insolvency? That's the only way out. I don't know your financial situation but if all your debts exceed your assets you could get out of reporting the income (it reduces your basis in an asset like a house). I know someone who had short sale while in school so between all the student loans offsetting his retirement accounts he was technically insolvent on the day the loan was forgiven.
 
So you got two options:

1) pay the IRS via a credit card
2) start a payment plan with the IRS, it's pretty easy...I think if you owe <$25k, you can just do it automatically online. Interest rates/penalties are reasonable as long as you do it by tomorrow (4/18).

Jack up your withholdings this year and they'll deduct any refund you get for 2017 and apply it to your balance.

You can walk from WF...but you can't walk from the Tax Man.


Sent from my iPhone using SDN mobile app
 
Sparda29 said:
When you owe multiple loans to multiple companies, it can get out of hand.
Click to expand...

Hahahah, aren't you the guy that was posting about the night life in NYC?

... Wait, how do you survive, even without loans, in NYC on $90k?
 
confettiflyer said:
So you got two options:

1) pay the IRS via a credit card
2) start a payment plan with the IRS, it's pretty easy...I think if you owe <$25k, you can just do it automatically online. Interest rates/penalties are reasonable as long as you do it by tomorrow (4/18).

Jack up your withholdings this year and they'll deduct any refund you get for 2017 and apply it to your balance.

You can walk from WF...but you can't walk from the Tax Man.


Sent from my iPhone using SDN mobile app
Click to expand...

Yep, I know that. It was just a big ass surprise to see a $3k refund disappear and be replaced by a $17k payment. I did donate a **** ton of clothes and toys this year so I got a little break via that. I'm just gonna set up a payment plan.
 
Rockinacoustic said:
It's easy when your roommates are Mom and Dad
Click to expand...

Mom, Dad, Grandpa*, Grandma*, Brother*, Sister*. Every time I bring up moving out I get the lecture about how I gotta stay and take care of the grandparents and how only a fool would go and get a place when there is a perfectly good 5 bedroom house to use.
 
It is worth the credit hit to get rid of the loan. Congrats
 
msweph said:
How long does the credit hit last?
Click to expand...

Technically 7 years on report but the actual effects are pretty degraded by year 3, depending on the credit model used.

I've seen foreclosures trickle over the 700 mark by year 3.


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