Payments and Penalties

Individuals can base their payments on:
90% of the current years tax or
100% of the prior years tax or
110% of the prior years tax if the prior year's AGI is more than $150,000 ($75,000 if filing Married filing Separately)
Note that there is no penalty for not paying federal estimates if the current year's tax is less than $1,000 or there was no tax liability in the precedding year.

You must file Form 8857 to claim innocent spouse relief. This must be filed within two years from the date the IRS collection division advised you of a tax liability for the joint return filed by you and your former spouse.

Form 1099-C is issued by banks, credit unions and federal government agencies that forgives or cancels a debt that you owe $600 or more. Generally the amount in box 2 must be reported as other income on Form 1040 line 21 unless one of the exclusions applies.

The Mortgage Forgiveness Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for this relief. This provision applies to debt forgiven in calendar years 2007 through 2013. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if (MFS).

Yes. Form 8379 is the form you can use for Injured Spouse relief to get your portion of a joint tax returns refund. You are an injured spouse if all or part of your share of the overpayment shown on your joint IRS Form 1040 was or is expected to be applied against your spouse’s past due child support or spousal support payments of Federal debts such as student loans. You can file IRS Form 8379 if all 3 of the following conditions are met. You are not required to pay the past due amount. You received and reported income such as wages, taxable interest etc. on a joint return or your main home was in a community property state other than Arizona. (Community property states are CA,ID,LA,NE,NM,TX,WA and WI). You made and reported payments such as Federal income tax withheld from your wages or estimated tax payments or you claimed an earned income credit or other refundable credit on a joint return.

Generally, the cancellation of student loans results in taxable income unless an exception exists. Certain exclusions exist for working in a certain geographic location, public service positions in government or charitable organizations, undeserved communities

Debt cancelled in a Title 11 bankruptcy case is not includable in your gross income if the cancellation is granted by the court or under a plan approved by the court. Certain losses, credits and basis of property must be reduced by the amounts excluded by cancellation of debt.

If your lender agrees with a restructuring, workout that reduces the principal of your debt, the debt reduction is considered cancellation of debt and reportable as other income on Form 1040 line 21 and you may claim the principal residence exclusion.

If a debt is cancelled or forgiven other than as a gift or bequest the debtor generally must include the cancelled amount in gross income for tax purposes. Qualified principal residence indebtness is excluded from income. Exclusions are also allowed for business real estate debt or farm debt of insolvent and bankrupt individuals. The exclusions are allowed for up to 2 million of debt.