Greetings folks. I've subbed to of for quite some time and learned a lot about the important numbers in my life. Short summary, I'm 23 years old and I've been investing in my 401k for a few years now. I live with my girlfriend in an affordable rented house at the moment with hopes to buy in the next few years once I finish college. We both have a lot of student loan debt but I'm still finishing school and she's set up to pay hers off in 8 to 10 years. I have credit card debt I'm working to pay off. I work full time while going to school full time.
So, I get a letter forwarded to me from my old address yesterday from the IRS detailing that they believe I owe an additional 869 dollars in taxes. This is due to two reasons.
The first being a "forgotten" 1099-c. Basically I settled on some credit card debt at the beginning of 2015 for a killer deal. I know it may not have been the best choice but it was my best option at the time. Now, I never received a 1099-c from the lender, but they obviously still filled it with the IRS. This was for 1300 or so dollars, of which is now unclaimed gross income.
The IRS only wants 120 bucks or so for this, but I'm not sure if I even have to pay it. Money is tight right now as I lost my job this fall for almost 3 months and I'm still recovering, otherwise I'd pay it. That said, I own a car worth 2000 bucks, a motorcycle at that time worth 500, various other knick knacks worth 5000, and some collectible paintball equipment worth 5000 when the market is good. On the other hand I have more than 60k in student loan debt, some private some federal, as well as some credit card debt at that time. To my understanding, that puts me in a state of gross insolvency, not requiring me to report form 1099-c for 1300 as additional income. I need someone with more knowledge to confirm that and guide me in the process to claim that I am insolvent in my response to the IRS.
The second and only other thing that they are claiming is a discrepancy with my education credit, specifically box 2 of my 1098-t from my university. The form essentially says that box 1 is the official number need but that box 2 is allowed by universities, but that box 2 is just what is charged to me and not necessarily what I paid. In this case it is indeed what I paid and I checked my university's financial summary for that year to confirm.
Does this mean I shouldn't owe the 700ish dollars that they're saying I do, and that in my response I should disagree and inform them that I did indeed pay those? Should I attach proof that my student loans were disbursed to pay those expenses? From where I'm sitting it looks like I was entitled to the education credit that I took, and indeed paid the expenses to my university that I claimed I did. Any expert help or guidance would be appreciated here.
I really appreciate any help offered to me. I couldn't find much information about getting a letter like this with my specific issues when I did my research, and I'd prefer to avoid involving a tax expert just to keep costs down.
Submitted January 04, 2017 at 07:21AM by UnclBuck http://ift.tt/2j47Iad
