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Filing An Amended Tax Return For 2012

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Filing An Amended Tax Return For 2012

Filing an amended tax return for 2012 Index A Additional Child Tax Credit How to claim the additional child tax credit, Additional Child Tax Credit Assistance (see Tax help) C Child Tax Credit Qualifying child, Child Tax Credit Claiming the Credit, Claiming the Credit E Earned Income, Earned Income F Free tax services, Free help with your tax return. Filing an amended tax return for 2012 H Help (see Tax help) L Limits on the Credit AGI, Limits on the Credit Modified AGI, Limits on the Credit P Publications (see Tax help) Q Qualifying Child Adopted child, Qualifying Child Exceptions to time lived with you, Qualifying Child Qualifying child of more than one person, Qualifying Child T Tax help, How To Get Tax Help TTY/TDD information, How To Get Tax Help Prev  Up     Home   More Online Publications
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Understanding Your CP05 Notice

We’re reviewing your tax return to verify the following:

  • Your income
  • The withholding you reported on your income and social security benefits
  • The tax credits you claimed
  • The household help you claimed
  • Your business income

We’re holding your refund pending the results of our review.


What you need to do

You don’t need to take any action at this time. We may contact third parties to verify the information you reported on your return. If you haven’t received your refund or been contacted by us within 45 days from the date of this notice, you can call us at the number provided on your notice.


You may want to

  • Review this notice with your tax preparer.
  • If you are experiencing economic harm, believe an IRS system or procedure isn’t working as it should, or are seeking help in resolving tax problems that have not been resolved through normal channels, you may be eligible for Taxpayer Advocate Service (TAS) assistance. You can reach them at 1-877-777-4778 or TTY/TTD 1-800-829-4059.

Answers to Common Questions

Why was my return being reviewed?
While most returns are accepted as filed, some are selected for examination. The IRS examines some federal tax returns to determine if income, expenses, and credits are being reported accurately. The IRS selects returns for examination using various methods which include random sampling, computerized screening, and comparison of information received by the IRS such as Forms W-2 and 1099. Having your return selected for examination does not suggest that you made an error or were dishonest.

What if I did not file a tax return claiming the items you are questioning and someone else is using my name and social security number?
Send us a completed and signed Form 14039, Identity Theft Affidavit. You can download this form online at www.irs.gov. You can also refer to the IRS Identity Theft resource page for more information.


Tips for next year

Review all of your income and withholding documents for completeness and review your return to make sure you are eligible to claim all income, credits and business income that you reported.

Page Last Reviewed or Updated: 19-Feb-2014

How to get help

  • Call the 1-800 number listed on the top right corner of your notice.
  • Authorize someone (e.g., accountant) to contact the IRS on your behalf using Form 2848.
  • See if you qualify for help from a Low Income Taxpayer Clinic.
     

The Filing An Amended Tax Return For 2012

Filing an amended tax return for 2012 1. Filing an amended tax return for 2012   Canceled Debts Table of Contents General RulesForm 1099-C Discounts and loan modifications Sales or other dispositions (such as foreclosures and repossessions) Abandonments Stockholder debt This chapter discusses the tax treatment of canceled debts. Filing an amended tax return for 2012 General Rules Generally, if a debt for which you are personally liable is forgiven or discharged for less than the full amount owed, the debt is considered canceled in whatever amount it remained unpaid. Filing an amended tax return for 2012 There are exceptions to this rule, discussed under Exceptions , later. Filing an amended tax return for 2012 Generally, you must include the canceled debt in your income. Filing an amended tax return for 2012 However, you may be able to exclude the canceled debt. Filing an amended tax return for 2012 See Exclusions , later. Filing an amended tax return for 2012 Example. Filing an amended tax return for 2012 John owed $1,000 to Mary. Filing an amended tax return for 2012 Mary agreed to accept and John paid $400 in satisfaction of the entire debt. Filing an amended tax return for 2012 John has canceled debt of $600. Filing an amended tax return for 2012 Example. Filing an amended tax return for 2012 Margaret owed $1,000 to Henry. Filing an amended tax return for 2012 Henry and Margaret agreed that Margaret would provide Henry with services (instead of money) in full satisfaction of the debt. Filing an amended tax return for 2012 Margaret does not have canceled debt. Filing an amended tax return for 2012 Instead, she has income from services. Filing an amended tax return for 2012 A debt includes any indebtedness: For which you are liable, or Subject to which you hold property. Filing an amended tax return for 2012 Debt for which you are personally liable is recourse debt. Filing an amended tax return for 2012 All other debt is nonrecourse debt. Filing an amended tax return for 2012 If you are not personally liable for the debt, you do not have ordinary income from the cancellation of debt unless you retain the collateral and either: The lender offers a discount for the early payment of the debt, or The lender agrees to a loan modification that results in the reduction of the principal balance of the debt. Filing an amended tax return for 2012 See Discounts and loan modifications , later. Filing an amended tax return for 2012 However, upon the disposition of the property securing a nonrecourse debt, the amount realized includes the entire unpaid amount of the debt, not just the FMV of the property. Filing an amended tax return for 2012 As a result, you may realize a gain or loss if the outstanding debt immediately before the disposition is more or less than your adjusted basis in the property. Filing an amended tax return for 2012 For more details on figuring your gain or loss, see chapter 2 of this publication or see Publication 544. Filing an amended tax return for 2012 There are several exceptions and exclusions that may result in part or all of a canceled debt being nontaxable. Filing an amended tax return for 2012 See Exceptions and Exclusions, later. Filing an amended tax return for 2012 You must report any taxable canceled debt as ordinary income on: Form 1040 or Form 1040NR, line 21, if the debt is a nonbusiness debt; Schedule C (Form 1040), line 6 (or Schedule C-EZ (Form 1040), line 1), if the debt is related to a nonfarm sole proprietorship; Schedule E (Form 1040), line 3, if the debt is related to nonfarm rental of real property; Form 4835, line 6, if the debt is related to a farm rental activity for which you use Form 4835 to report farm rental income based on crops or livestock produced by a tenant; or Schedule F (Form 1040), line 8, if the debt is farm debt and you are a farmer. Filing an amended tax return for 2012 Form 1099-C If you receive a Form 1099-C, that means an applicable entity has reported an identifiable event to the IRS regarding a debt you owe. Filing an amended tax return for 2012 The identifiable event may be an actual cancellation of the debt or it may be an event the applicable entity is required, solely for purposes of reporting to the IRS, to treat as a cancellation of debt. Filing an amended tax return for 2012 For information on the reasons an applicable entity files Form 1099-C, see Identifiable event codes, later. Filing an amended tax return for 2012 Unless you meet one of the exceptions or exclusions discussed later, this canceled debt is ordinary income and must be reported on the appropriate form discussed above. Filing an amended tax return for 2012 An applicable entity includes: A federal government agency, A financial institution, A credit union, and Any organization a significant trade or business of which is lending money. Filing an amended tax return for 2012 Identifiable event codes. Filing an amended tax return for 2012    Box 6 of Form 1099-C should indicate the reason the creditor filed this form. Filing an amended tax return for 2012 The codes shown in box 6 are explained below. Filing an amended tax return for 2012 Also see the chart after the explanation for a quick reference guide for the codes used in Box 6. Filing an amended tax return for 2012 Note. Filing an amended tax return for 2012 Codes A through G and I identify specific occurrences resulting from an actual discharge of indebtedness. Filing an amended tax return for 2012 However, Code H, Expiration of nonpayment testing period, does not necessarily identify an actual discharge of indebtedness. Filing an amended tax return for 2012 Code A — Bankruptcy. Filing an amended tax return for 2012 Code A is used to identify cancellation of debt as a result of a title 11 bankruptcy case. Filing an amended tax return for 2012 See Bankruptcy , later. Filing an amended tax return for 2012 Code B — Other judicial debt relief. Filing an amended tax return for 2012 Code B is used to identify cancellation of debt as a result of a receivership, foreclosure, or similar federal or state court proceeding other than bankruptcy. Filing an amended tax return for 2012 Code C — Statute of limitations or expiration of deficiency period. Filing an amended tax return for 2012 Code C is used to identify cancellation of debt either when the statute of limitations for collecting the debt expires or when the statutory period for filing a claim or beginning a deficiency judgment proceeding expires. Filing an amended tax return for 2012 In the case of the expiration of a statute of limitations, an identifiable event occurs only if and when your affirmative defense of the statute of limitations is upheld in a final judgment or decision in a judicial proceeding, and the period for appealing the judgment or decision has expired. Filing an amended tax return for 2012 Code D — Foreclosure election. Filing an amended tax return for 2012 Code D is used to identify cancellation of debt when the creditor elects foreclosure remedies that statutorily end or bar the creditor's right to pursue collection of the debt. Filing an amended tax return for 2012 This event applies to a mortgage lender or holder who is barred from pursuing debt collection after a power of sale in the mortgage or deed of trust is exercised. Filing an amended tax return for 2012 Code E — Debt relief from probate or similar proceeding. Filing an amended tax return for 2012 Code E is used to identify cancellation of debt as a result of a probate court or similar legal proceeding. Filing an amended tax return for 2012 Code F — By agreement. Filing an amended tax return for 2012 Code F is used to identify cancellation of debt as a result of an agreement between the creditor and the debtor to cancel the debt at less than full consideration. Filing an amended tax return for 2012 Code G — Decision or policy to discontinue collection. Filing an amended tax return for 2012 Code G is used to identify cancellation of debt as a result of a decision or a defined policy of the creditor to discontinue collection activity and cancel the debt. Filing an amended tax return for 2012 For purposes of this identifiable event, a defined policy includes both a written policy and the creditor's established business practice. Filing an amended tax return for 2012 Code H — Expiration of nonpayment testing period. Filing an amended tax return for 2012 Code H is used to indicate that the creditor has not received a payment on the debt during a testing period ending on December 31, 2013. Filing an amended tax return for 2012 The testing period is a 36-month period increased by the number of months the creditor was prevented from engaging in collection activity by a stay in bankruptcy or similar bar under state or local law. Filing an amended tax return for 2012 This identifiable event applies only for a creditor that is a financial institution or credit union (and certain of their subsidiaries), the Federal Deposit Insurance Corporation (FDIC), Resolution Trust Corporation (RTC), National Credit Union Administration (NCUA), and other Federal executive agencies. Filing an amended tax return for 2012 Expiration of the nonpayment testing period does not necessarily result from an actual discharge of indebtedness. Filing an amended tax return for 2012 Code I — Other actual discharge before identifiable event. Filing an amended tax return for 2012 Code I is used to identify an actual cancellation of debt that occurs before any of the identifiable events described in codes A through H. Filing an amended tax return for 2012 Form 1099-C Reference Guide for Box 6 Identifiable Event Codes A Bankruptcy B Other judicial debt relief C Statute of limitations or expiration of deficiency period D Foreclosure election E Debt relief from probate or similar proceeding F By agreement G Decision or policy to discontinue collection H Expiration of nonpayment testing period I Other actual discharge before identifiable event Even if you did not receive a Form 1099-C, you must report canceled debt as gross income on your tax return unless one of the exceptions or exclusions described later applies. Filing an amended tax return for 2012 Amount of canceled debt. Filing an amended tax return for 2012    The amount in box 2 of Form 1099-C may represent some or all of the debt that has been canceled or treated as canceled. Filing an amended tax return for 2012 The amount in box 2 will include principal and may include interest and other nonprincipal amounts (such as fees or penalties). Filing an amended tax return for 2012 Unless you meet one of the exceptions or exclusions discussed later, the amount of the debt that has been canceled is ordinary income and must be reported on the appropriate form as discussed earlier. Filing an amended tax return for 2012 Interest included in canceled debt. Filing an amended tax return for 2012    If any interest is included in the amount of canceled debt in box 2, it will be shown in box 3. Filing an amended tax return for 2012 Whether the interest portion of the canceled debt must be included in your income depends on whether the interest would be deductible if you paid it. Filing an amended tax return for 2012 See Deductible Debt under Exceptions, later. Filing an amended tax return for 2012 Persons who each receive a Form 1099-C showing the full amount of debt. Filing an amended tax return for 2012    If you and another person were jointly and severally liable for a canceled debt, each of you may get a Form 1099-C showing the entire amount of the canceled debt. Filing an amended tax return for 2012 However, you may not have to report that entire amount as income. Filing an amended tax return for 2012 The amount, if any, you must report depends on all the facts and circumstances, including: State law, The amount of debt proceeds each person received, How much of any interest deduction from the debt was claimed by each person, How much of the basis of any co-owned property bought with the debt proceeds was allocated to each co-owner, and Whether the canceled debt qualifies for any of the exceptions or exclusions described in this publication. Filing an amended tax return for 2012 See Example 3 under Insolvency, later. Filing an amended tax return for 2012 Discounts and loan modifications If a lender discounts (reduces) the principal balance of a loan because you pay it off early, or agrees to a loan modification (a “workout”) that includes a reduction in the principal balance of a loan, the amount of the discount or the amount of principal reduction is canceled debt. Filing an amended tax return for 2012 However, if the debt is nonrecourse and you did not retain the collateral, you do not have cancellation of the debt income. Filing an amended tax return for 2012 The amount of the canceled debt must be included in income unless one of the exceptions or exclusions described later applies. Filing an amended tax return for 2012 For more details, see Exceptions and Exclusions, later. Filing an amended tax return for 2012 Sales or other dispositions (such as foreclosures and repossessions) Recourse debt. Filing an amended tax return for 2012   If you owned property that was subject to a recourse debt in excess of the FMV of the property, the lender's foreclosure or repossession of the property is treated as a sale or disposition of the property by you and may result in your realization of gain or loss. Filing an amended tax return for 2012 The gain or loss on the disposition of the property is measured by the difference between the FMV of the property at the time of the disposition and your adjusted basis (usually your cost) in the property. Filing an amended tax return for 2012 The character of the gain or loss (such as ordinary or capital) is determined by the character of the property. Filing an amended tax return for 2012 If the lender forgives all or part of the amount of the debt in excess of the FMV of the property, the cancellation of the excess debt may result in ordinary income. Filing an amended tax return for 2012 The ordinary income from the cancellation of debt (the excess of the canceled debt over the FMV of the property) must be included in your gross income reported on your tax return unless one of the exceptions or exclusions described later applies. Filing an amended tax return for 2012 For more details, see Exceptions and Exclusions, later. Filing an amended tax return for 2012 Nonrecourse debt. Filing an amended tax return for 2012   If you owned property that was subject to a nonrecourse debt in excess of the FMV of the property, the lender's foreclosure on the property does not result in ordinary income from the cancellation of debt. Filing an amended tax return for 2012 The entire amount of the nonrecourse debt is treated as an amount realized on the disposition of the property. Filing an amended tax return for 2012 The gain or loss on the disposition of the property is measured by the difference between the total amount realized (the entire amount of the nonrecourse debt plus the amount of cash and the FMV of any property received) and your adjusted basis in the property. Filing an amended tax return for 2012 The character of the gain or loss is determined by the character of the property. Filing an amended tax return for 2012 More information. Filing an amended tax return for 2012    See Publications 523, 544, and 551, and chapter 2 of this publication for more details. Filing an amended tax return for 2012 Abandonments Recourse debt. Filing an amended tax return for 2012   If you abandon property that secures a debt for which you are personally liable (recourse debt) and the debt is canceled, you will realize ordinary income equal to the canceled debt. Filing an amended tax return for 2012 You must report this income on your tax return unless one of the exceptions or exclusions described later applies. Filing an amended tax return for 2012 For more details, see Exceptions and Exclusions, later. Filing an amended tax return for 2012 This income is separate from any amount realized from the abandonment of the property. Filing an amended tax return for 2012 For more details, see chapter 3. Filing an amended tax return for 2012 Nonrecourse debt. Filing an amended tax return for 2012   If you abandon property that secures a debt for which you are not personally liable (nonrecourse debt), you may realize gain or loss but will not have cancellation of indebtedness income. Filing an amended tax return for 2012 Stockholder debt If you are a stockholder in a corporation and the corporation cancels or forgives your debt to it, the canceled debt is a constructive distribution. Filing an amended tax return for 2012 For more information, see Publication 542, Corporations. Filing an amended tax return for 2012 Prev  Up  Next   Home   More Online Publications