Tax Break

Why do people in California have so many tax questions?

In the last three months,Avvo, a site where people from all over the United States can go for free answers to legal and medical questions, has seen a more than 200 percent climb in its tax-related questions. The area with the most tax questions was Los Angeles, but San Francisco and San Diego  were also leaders in the area.

Josh King, a Seattle lawyer who’s also vice president of business development and general counsel for Avvo, said a lot of the California tax questions are property-related, the leftovers of that state’s real estate meltdown. Among them: the tax implication of short sales and foreclosures, as well as how to get property tax reassessed.

A second big tax category in California is business taxes with questions focused on tax collection and filing requirements.

Over 10,000 tax questions have been asked and answered across the country since the site launched five years ago.

More broadly, King said 17,000 answers to a variety of legal and medical questions have been posted in the last week alone. Tax is actually not one of the larger categories. Family law, divorce, personal injury and other consumer law questions are the most common.

Why would lawyers, doctors and dentists who might otherwise get paid for their knowledge post answers gratis? In part to build paying business, King said, but even more for greater visibility, online recognition, as well as keeping up with market interests.  Three million unique visitors hit the site every month.

Here are some of the most common tax-related questions coming in:

1099 forms used to report income from the cancellation of debts

• What is the statute of limitations of sending a 1099-C?
• I am planning a strategic default on my underwater home.   Will the IRS  tax me with a 1099?  Will a form 982 protect me?
• When is a form 1099-c (forgiveness of debt) not taxed?
• I got married this past year and my spouse never filed a 1099 from 10 years ago, Can the IRS keep my tax money this year?
• Can I file taxes without a 1099?

Divorce

• Should we divorce for tax savings?
• What are the tax exemptions for children in divorce?
• Can I file head of household if going through a divorce?
• How will retirement income be taxed after divorce?
• With 50/50 shared custody, and no divorce agreement, who gets to claim our child when filing taxes?

Foreclosure

• I had an investment home go into foreclosure in November.  I just received a 1099 tax form.  How can I file for insolvency?
• Can we receive a forgiveness of indebtedness income from our home foreclosure?
• If my second home goes into foreclosure, will I still be responsible for the property taxes?
• What are the tax consequences in the state of CA regarding short sale or deed in lieu of foreclosure?
• For tax purposes, how do I accurately determine gain or loss due to ‘sale’ via non-judicial foreclosure?