IRS Form 1099-A

irs form 1099-a
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Among all the forms issued by the Internal Revenue Service of the United States (also called IRS shortly), IRS Form 1099-A is not necessarily meant for every taxpayer. If you, unfortunately, cannot fulfill your commitment and pay the mortgage, you may be familiar with this record.

Its full name is the “Acquisition or Abandonment of Secured Property.” It is used for situations when you, as an obligor, are incapable of paying anymore and a creditor decides to foreclose your property (the one for which you have to cover the debt).

Borrowers must include the details from this form in their tax returns because, in the United States, foreclosure is considered a sale, so the borrower either gains a certain sum or loses it. If there is profit, the tax must be deducted by the respective authorities. If you do not understand how to use the form for your tax return, either the IRS consultants or tax professionals may assist you in such matters. We strongly recommend asking them questions not to make any mistakes when filing your tax records.

Who Submits the Form

It is a lender’s responsibility to fill the form out, submit it to the IRS, and pass the copy to a debtor. If there is more than one debtor, each person must receive their own copy.

The official submission deadline for the form is the last day of February each year, and all borrowers should receive their copies no later than the end of January.

How to Fill Out the Form

If you are a debtor reading this article, you should just wait until the filled-out form is delivered to you. If you are a lender who needs to complete the template, think twice before reading the instructions below: it is much better to hire a professional who specializes in various tax records and knows how to create them properly.

It would be such a mess if you create your IRS Form 1099-A, issue it to everybody, and then find out that mistakes occurred, and you have to start the whole process over (even better with missed deadlines, right?). So, complete this template only as a last resort, when there is absolutely no possibility to hire someone who will do it for you.

Download the Proper File to Fill Out

Looking for the right and current template may be tricky, especially for some legal records. Our up-to-date form-building software is designed for those who want to get any template as fast as possible. You can use it to download the file effortlessly. Of course, you can go to the Tax Service’s official website but, with our software, you can skip this step.

Skip the “Copy A” Part

It is crucial to understand that you, as a creditor, must know that regardless of where you download the PDF file from (be it our site or the official Service’s website), you cannot fill out the form part that you should send to the IRS. You can complete only those two parts you will use by yourself and deliver to your debtor. To get the official copy that you can submit to the Service, you must contact its representatives via the official website. If you use the downloaded copy, you will be subject to a penalty.

Prepare the Debtor’s Copy

The first part to fill out is Copy B or the one you will later send to your obligor. The chart you see here is quite simple.

The left-hand side fields require inserting the creditor’s and obligor’s data. Write your name, valid telephone number, and full address (including your postal code). If the obligor has any concerns regarding this record, they will be able to reach you using the address or phone number you have added here.

step 3.1 prepare the debtor’s copy - filling out an irs form 1099-a
Below your data, insert your TIN (tax identification number). Nearby, write the borrower’s TIN, too.

step 3.2 prepare the debtor’s copy - filling out an irs form 1099-a
Then, introduce the borrower: put their full address and account number (many lenders use such numbers to identify their obligors easily).

step 3.3 prepare the debtor’s copy - filling out an irs form 1099-a
After adding all the basic details, proceed to the right-hand side of the chart. Here, you will describe the debt and related circumstances. Box 1 is for the date when you acquired the property or found out that it was abandoned. In the next box, write the debt’s balance on the day indicated in Box 1.

step 3.4 prepare the debtor’s copy - filling out an irs form 1099-a
Leave Box 3 blank because it is reserved for future Service’s purposes if the template needs to be changed. Insert the property’s fair market value in the following box.

step 3.5 prepare the debtor’s copy - filling out an irs form 1099-a
If the obligor was personally liable to cover the debt, mark the box in Line 5 below. In Box 6, describe the abandoned or acquired estate. If it is real estate, you can enter its address. If it is anything tangible (for example, a vehicle), you can add its brand, model, manufacturing year, serial number, and other relevant details.

step 3.6 prepare the debtor’s copy - filling out an irs form 1099-a
Remember that all borrowers must receive this copy prior to the deadline. When everything is ready, send the required number of papers to your debtors so they can review the written info and use the document for their further tax returns.

Duplicate the Details

Copy C is the one that creditors will keep among their financial records. The chart represented here is the same as in Copy B, so you shall just duplicate everything you have inserted above.

step 4 duplicate the details - filling out an irs form 1099-a
Get the Copy A to Fill Out

Bear in mind that you should get the additional Copy A file. After you get it, duplicate the inserted data because the visible chart remains the same. This record should then go to the IRS office before the deadline.

Even though the form content and the compilation process may seem simple, remember that anytime you, deliberately or not, state the incorrect or untrue details there, the consequences may be tough (including fines or even jail).