Hello,
Question so I was divorced and my ex and I 2016 tax return was reviewed by the IRS and said that due to two credit cards settled for less the two companies sent a 1099-C I didn't claim on 2016 return. I never got these from the creditors which is why I didn't include them on my 1040. In addition, they are wanting back the educational credit received for this tax year as well. Resulting in owing back like $5,200 now with interest and penalties. I spoke with the IRS after a YEAR I finally got a decent agent. They said I could send in a document typed in word listing the educational expenses and that I could file a form 982 and insulvancy worksheet where if my debt/liabilities were greater then my assets at this time I would/could be considered insolvent and this could wipe the amount due to the IRS. So needless to say I faxed in the information right away to the IRS and the collection department put a 60-90 day hold on levy and collection efforts. They said it would take 6-8 weeks to re-open my case and then they would process the information and make adjustments and alert me the results/outcome of this.
My question is while this is being done with tax season just around the corner will the IRS hold the tax return while this is being reviewed/investigated? I do know they said if owed they would would take the full amount from whoever files first. Which I understand and already took my ex wife to court over this and was awarded a judgment for half she is responsible for. That being said the IRS doesn't consider this and won't split the balance due until half and half for each person to pay. Essentially they mirror the accounts with the full balance due and each person can setup a payment plan. So I was just curious how this will impact filing taxes this year, if she files first will they hold her return, until the outcome is decided, or if I file first will they hold mine? Or will they process and refund the amount due back to either person until this is reviewed and then come after both parties for the balance?
I believe I am insolvent so it hopefully will be a non-issue and wipe the balance due. But wanted to know how this will impact filing 2020 taxes in January - April.
Thanks in advance for any information you can provide.
