How to Fill Out Form 1099-A?

Filling out Form 1099-A is an essential task for lending when a property has been foreclosed upon or abandoned.

This guide will walk you through the steps to accurately complete Form 1099-A, ensuring compliance with IRS requirements and helping simplify this complex financial reporting process.

Understanding The Components Of a 1099-A Form

Form 1099-A is divided into the right side and the left side. The left side mostly displays details about the lender and borrower, including, name, address, tax identification number (TIN), and account number of the borrower. The right side of the form has 6 boxes, which are:

1. Box 1: This box is filled with the lender's acquisition or abandonment date. It shows the date the lender acquired the property or when the lender learned the property had been abandoned.
2. Box 2: Balance of principal understanding. This box shows the principal loan balance when the lender acquires the property or learns that the property has been abandoned.
3. Box 3: This box is usually left blank.
4. Box 4: Fair Market Value (FMV) of the property. This box shows the fair market value of the foreclosed property. If the amount in Box 4 is less than in Box 2, the debt is canceled, and a debt cancellation can occur. If so, the borrower must also receive Form 1099-C.
5. Box 5: Check if the borrower is personally liable for debt repayment. This box indicates whether the borrower was fully responsible for the debt when it was created or amended based on the latest modification.
6. Box 6: Property description. This box shows information about the property, such as its address.

How to Fill In a 1099-A Form

Step 1: Find a Template

Find a template you approve of, like the one below from PDF Reader Pro's Templates.

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Step 2: Edit PDF Form

Launch PDF Reader Pro, click on "Edit PDF", then click on "Add Text", and draw a text box where you need to fill in your info.

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Step 3: Save or Print

Once you've completed your form, click on "File" and click on "Save or Save As" if you're sharing or alternatively click on "Print".

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Who Needs to Fill In The 1099-A Form?

Form 1099-A, Acquisition or Abandonment of Secured Property, is required to be filled out by the following entities:

1. Lenders: Banks or financial institutions that have loaned money secured by property.
2. Creditors: Any entity that has extended credit to a borrower, where the credit is secured by property.

Use Cases For a 1099-A Form

The form is used under the following circumstances:

1. Foreclosures: When a property is foreclosed upon, the lender must report the details to the IRS.
2. Repossessions: If the lender repossesses the property used as security for a loan, Form 1099-A must be filled out.
3. Voluntary Conveyance: When a borrower voluntarily transfers possession of the property to the lender instead of foreclosure.
4. Abandonments: If the borrower abandons the property that secures a loan, the lender must report this to the IRS.

These scenarios trigger the need for reporting to ensure that the IRS can accurately assess any implications for income tax due to the discharge of indebtedness.

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