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Highest State Taxes

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Highest State Taxes

Highest state taxes 2. Highest state taxes   Foreclosures and Repossessions Table of Contents Amount realized and ordinary income on a recourse debt. Highest state taxes Amount realized on a nonrecourse debt. Highest state taxes If you do not make payments you owe on a loan secured by property, the lender may foreclose on the loan or repossess the property. Highest state taxes The foreclosure or repossession is treated as a sale from which you may realize gain or loss. Highest state taxes This is true even if you voluntarily return the property to the lender. Highest state taxes If the outstanding loan balance was more than the FMV of the property and the lender cancels all or part of the remaining loan balance, you also may realize ordinary income from the cancellation of debt. Highest state taxes You must report this income on your return unless certain exceptions or exclusions apply. Highest state taxes See chapter 1 for more details. Highest state taxes Borrower's gain or loss. Highest state taxes    You figure and report gain or loss from a foreclosure or repossession in the same way as gain or loss from a sale. Highest state taxes The gain is the difference between the amount realized and your adjusted basis in the transferred property (amount realized minus adjusted basis). Highest state taxes The loss is the difference between your adjusted basis in the transferred property and the amount realized (adjusted basis minus amount realized). Highest state taxes For more information on figuring gain or loss from the sale of property, see Gain or Loss From Sales and Exchanges in Publication 544. Highest state taxes You can use Table 1-1 to figure your ordinary income from the cancellation of debt and your gain or loss from a foreclosure or repossession. Highest state taxes Amount realized and ordinary income on a recourse debt. Highest state taxes    If you are personally liable for the debt, the amount realized on the foreclosure or repossession includes the smaller of: The outstanding debt immediately before the transfer reduced by any amount for which you remain personally liable immediately after the transfer, or The FMV of the transferred property. Highest state taxes The amount realized also includes any proceeds you received from the foreclosure sale. Highest state taxes If the FMV of the transferred property is less than the total outstanding debt immediately before the transfer reduced by any amount for which you remain personally liable immediately after the transfer, the difference is ordinary income from the cancellation of debt. Highest state taxes You must report this income on your return unless certain exceptions or exclusions apply. Highest state taxes See chapter 1 for more details. Highest state taxes       Example 1. Highest state taxes Tara bought a new car for $15,000. Highest state taxes She made a $2,000 downpayment and borrowed the remaining $13,000 from the dealer's credit company. Highest state taxes Tara is personally liable for the loan (recourse debt) and the car is pledged as security for the loan. Highest state taxes On August 1, 2013, the credit company repossessed the car because Tara had stopped making loan payments. Highest state taxes The balance due after taking into account the payments Tara made was $10,000. Highest state taxes The FMV of the car when it was repossessed was $9,000. Highest state taxes On November 15, 2013, the credit company forgave the remaining $1,000 balance on the loan due to insufficient assets. Highest state taxes In this case, the amount Tara realizes is $9,000. Highest state taxes This is the smaller of: The $10,000 outstanding debt immediately before the repossession reduced by the $1,000 for which she remains personally liable immediately after the repossession ($10,000 − $1,000 = $9,000), or The $9,000 FMV of the car. Highest state taxes Tara figures her gain or loss on the repossession by comparing the $9,000 amount realized with her $15,000 adjusted basis. Highest state taxes She has a $6,000 nondeductible loss. Highest state taxes After the cancellation of the remaining balance on the loan in November, Tara also has ordinary income from cancellation of debt in the amount of $1,000 (the remaining balance on the $10,000 loan after the $9,000 amount satisfied by the FMV of the repossessed car). Highest state taxes Tara must report this $1,000 on her return unless one of the exceptions or exclusions described in chapter 1 applies. Highest state taxes Example 2. Highest state taxes Lili paid $200,000 for her home. Highest state taxes She made a $15,000 downpayment and borrowed the remaining $185,000 from a bank. Highest state taxes Lili is personally liable for the mortgage loan and the house secures the loan. Highest state taxes In 2013, the bank foreclosed on the mortgage because Lili stopped making payments. Highest state taxes When the bank foreclosed the mortgage, the balance due was $180,000, the FMV of the house was $170,000, and Lili's adjusted basis was $175,000 due to a casualty loss she had deducted. Highest state taxes At the time of the foreclosure, the bank forgave $2,000 of the $10,000 debt in excess of the FMV ($180,000 minus $170,000). Highest state taxes She remained personally liable for the $8,000 balance. Highest state taxes In this case, Lili has ordinary income from the cancellation of debt in the amount of $2,000. Highest state taxes The $2,000 income from the cancellation of debt is figured by subtracting the $170,000 FMV of the house from the $172,000 difference between her total outstanding debt immediately before the transfer of property and the amount for which she remains personally liable immediately after the transfer ($180,000 minus $8,000). Highest state taxes She is able to exclude the $2,000 of canceled debt from her income under the qualified principal residence indebtedness rules discussed earlier. Highest state taxes Lili must also determine her gain or loss from the foreclosure. Highest state taxes In this case, the amount that she realizes is $170,000. Highest state taxes This is the smaller of: (a) the $180,000 outstanding debt immediately before the transfer reduced by the $8,000 for which she remains personally liable immediately after the transfer ($180,000 − $8,000 = $172,000) or (b) the $170,000 FMV of the house. Highest state taxes Lili figures her gain or loss on the foreclosure by comparing the $170,000 amount realized with her $175,000 adjusted basis. Highest state taxes She has a $5,000 nondeductible loss. Highest state taxes Table 1-1. Highest state taxes Worksheet for Foreclosures and Repossessions Part 1. Highest state taxes Complete Part 1 only if you were personally liable for the debt (even if none of the debt was canceled). Highest state taxes Otherwise, go to Part 2. Highest state taxes 1. Highest state taxes Enter the amount of outstanding debt immediately before the transfer of property reduced by any amount for which you remain personally liable immediately after the transfer of property   2. Highest state taxes Enter the fair market value of the transferred property   3. Highest state taxes Ordinary income from the cancellation of debt upon foreclosure or repossession. Highest state taxes * Subtract line 2 from line 1. Highest state taxes If less than zero, enter zero. Highest state taxes Next, go to Part 2   Part 2. Highest state taxes Gain or loss from foreclosure or repossession. Highest state taxes   4. Highest state taxes Enter the smaller of line 1 or line 2. Highest state taxes If you did not complete Part 1 (because you were not personally liable for the debt), enter the amount of outstanding debt immediately before the transfer of property   5. Highest state taxes Enter any proceeds you received from the foreclosure sale   6. Highest state taxes Add line 4 and line 5   7. Highest state taxes Enter the adjusted basis of the transferred property   8. Highest state taxes Gain or loss from foreclosure or repossession. Highest state taxes Subtract line 7 from line 6   * The income may not be taxable. Highest state taxes See chapter 1 for more details. Highest state taxes Amount realized on a nonrecourse debt. Highest state taxes    If you are not personally liable for repaying the debt secured by the transferred property, the amount you realize includes the full amount of the outstanding debt immediately before the transfer. Highest state taxes This is true even if the FMV of the property is less than the outstanding debt immediately before the transfer. Highest state taxes Example 1. Highest state taxes Tara bought a new car for $15,000. Highest state taxes She made a $2,000 downpayment and borrowed the remaining $13,000 from the dealer's credit company. Highest state taxes Tara is not personally liable for the loan (nonrecourse), but pledged the new car as security for the loan. Highest state taxes On August 1, 2013, the credit company repossessed the car because Tara had stopped making loan payments. Highest state taxes The balance due after taking into account the payments Tara made was $10,000. Highest state taxes The FMV of the car when it was repossessed was $9,000. Highest state taxes The amount Tara realized on the repossession is $10,000. Highest state taxes That is the outstanding amount of debt immediately before the repossession, even though the FMV of the car is less than $10,000. Highest state taxes Tara figures her gain or loss on the repossession by comparing the $10,000 amount realized with her $15,000 adjusted basis. Highest state taxes Tara has a $5,000 nondeductible loss. Highest state taxes Example 2. Highest state taxes Lili paid $200,000 for her home. Highest state taxes She made a $15,000 downpayment and borrowed the remaining $185,000 from a bank. Highest state taxes She is not personally liable for the loan, but grants the bank a mortgage. Highest state taxes The bank foreclosed on the mortgage because Lili stopped making payments. Highest state taxes When the bank foreclosed on the mortgage, the balance due was $180,000, the FMV of the house was $170,000, and Lili's adjusted basis was $175,000 due to a casualty loss she had deducted. Highest state taxes The amount Lili realized on the foreclosure is $180,000, the outstanding debt immediately before the foreclosure. Highest state taxes She figures her gain or loss by comparing the $180,000 amount realized with her $175,000 adjusted basis. Highest state taxes Lili has a $5,000 realized gain. Highest state taxes See Publication 523 to figure and report any taxable amount. Highest state taxes Forms 1099-A and 1099-C. Highest state taxes    A lender who acquires an interest in your property in a foreclosure or repossession should send you Form 1099-A, Acquisition or Abandonment of Secured Property, showing information you need to figure your gain or loss. Highest state taxes However, if the lender also cancels part of your debt and must file Form 1099-C, the lender can include the information about the foreclosure or repossession on that form instead of on Form 1099-A. Highest state taxes The lender must file Form 1099-C and send you a copy if the amount of debt canceled is $600 or more and the lender is a financial institution, credit union, federal government agency, or any organization that has a significant trade or business of lending money. Highest state taxes For foreclosures or repossessions occurring in 2013, these forms should be sent to you by January 31, 2014. Highest state taxes Prev  Up  Next   Home   More Online Publications
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Understanding your CP31 Notice

Your refund check was returned to us, so you need to update your address.

Printable samples of this notice (PDF)

Tax publications you may find useful

How to get help

Calling the 1-800 number listed on the top right corner of your notice is the fastest way to get your questions answered.

You can also authorize someone (such as an accountant) to contact the IRS on your behalf using this Power of Attorney and Declaration of Representative (Form 2848).

Or you may qualify for help from a Low Income Taxpayer Clinic.
 


What you need to do

Update your address in one of the following ways:

  • Online: Go to Where’s My Refund? to complete your change of address online, you’ll need your Social Security number, filing status, and the amount of your refund.
  • By phone: Call the number listed on your notice.
  • By mail: Complete and mail the Contact information section that came with your notice.

Answers to Common Questions

When will I receive my refund check?
You should receive your refund 3-4 weeks after you submit your correct address. For information about your refund, go to Where’s My Refund? or call the IRS toll free at 1-800-829-1954. You’ll need to provide your Social Security Number (or Individual Taxpayer Identification Number), your filing status and the exact whole dollar amount of your refund.

What do I need to do to get my refund through direct deposit next year?
When filing your tax return, complete the requested banking information in the "Refund" section of your tax form if you want to direct deposit the entire amount into one account. If you want to deposit into more than one account, you must file Form 8888, Direct Deposit of Refund to More Than One Account, with your return.

Since my refund check was returned, can I request that you mail it to my work address instead?
Refund checks are mailed only to the address of record, which is the address provided on the tax return or the result of a permanent address change request submitted after the return is filed.

I filed jointly, but my spouse and I are now divorced. Where will you send the refund? Can you send us two checks?
A refund check is mailed to the address of record, which is the address provided on the tax return or the result of a permanent address change request submitted after the return is filed.
 
The IRS issues one check per return.


Tips for next year

To receive your refund more quickly, consider requesting your refund through direct deposit. You can even request that your refund be distributed to separate accounts, such as checking, savings, or retirement accounts. To request this, use Form 8888, Direct Deposit of Refund to More Than One Account.

Consider filing your taxes electronically. Filing online can help you avoid mistakes and find credits and deductions that you may qualify for. In many cases you can file for free. Learn more about e-file.

Page Last Reviewed or Updated: 19-Mar-2014

The Highest State Taxes

Highest state taxes Publication 547 - Additional Material Prev  Up  Next   Home   More Online Publications