I've negotiated a repayment for my second mortgage but they have told me that they will take the difference as income and will file a Form 1099 for it. This year is the last year for the mortgage relief program. But since now I'm paying off the settlement, would the IRS count it on my 2013 taxes?

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The Mortgage Forgiveness Act is solely applicable to debts canceled through the end of taxable year 2012. Therefore, Form 1099C needs to be issued for this taxable year so that you can get the benefit of the forgiveness of debt. Though most second mortgages are eligible - some are not. To know more click on the link below or consult your CPA.

IRS Publication 4681


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