Have you been scratching your head wondering what is Form 1099-A? Or what mortgage lender 1099-A means? This blog tells you everything you need to know about this tax form and the 1099-A reporting requirements to keep your filing seamless and penalty-free!
What Is Form 1099-A?
Form 1099-A is officially titled “Acquisition or Abandonment of Secured Property”. It’s an IRS information return used to report the acquisition or abandonment of secured property.
So, who files Form 1099-A? It’s typically used when a lender takes possession of collateral such as home, car, land, or other property. This could be due to 1099-A foreclosure or abandonment.
If a lender acquires or finds out about an abandoned property, 1099-A must be filed. It’s not optional, no matter how small the loan was.
Why does the IRS care? That’s because the form provides key details about the property, like fair market value and the outstanding mortgage balance. This helps the IRS cross-check if a borrower has taxable gain or loss from a foreclosure. Basically, it’s the IRS foreclosure reporting form.
Here’s an example for you to understand better. Consider a homeowner who walks away from a property and the lender takes ownership. Form 1099-A helps document the event.
Who Must File Form 1099-A?
Who gets to go on this filing adventure? It’s usually the financial institutions. The primary filers are:
- Mortgage lenders
- Banks and credit unions
- Government lending agencies (e.g., FHA, VA, USDA)
- Finance companies that repossess secured property
When should the payer file it?
- When they acquire an interest in the property through foreclosure or repossession.
- When they become aware that the borrower has abandoned the property.
Note: Even if there was no foreclosure auction, an abandonment alone means you need to file 1099-A.
But there’s an exemption. Private individuals who make personal loans generally don’t have to file unless they’re operating as a trade or business. So, if your grandfather makes a small family loan, he’s off the hook.
What Goes on Form 1099-A?
| Information | What to Include |
|---|---|
| Borrower details | Name, address, and taxpayer identification number (TIN) |
| Property description | The address or legal description of the secured property |
| Date of acquisition or abandonment | The date the lender took ownership or learned of abandonment. |
| Balance of principal outstanding | Total loan principal owed at the time of foreclosure or abandonment |
| Fair Market Value (FMV) | Usually determined by appraisal, foreclosure auction price, or similar measure |
| Borrower liability status | Indicate whether the borrower was personally liable for repayment. |
Why it matters: The IRS uses the FMV versus the outstanding loan balance to figure out if there’s a potential taxable gain or debt forgiveness.
Tip: Keep your documentation of FMV calculation (appraisals, auction records) handy. Helps in case you need to defend yourself against IRS inquiries.
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Form 1099-A Boxes Guide
Here’s a breakdown of each box for you to file your 1099-A like a professional:
| Box | What to Enter | Notes for Payers |
|---|---|---|
| Box 1 | Date of acquisition or abandonment | Use the foreclosure date or the date when the payer became aware of abandonment. |
| Box 2 | Balance of principal outstanding | Enter only unpaid principal (exclude interest/fees) |
| Box 3 | Currently Reserved for future use (Rev 2025) | N/A |
| Box 4 | Fair Market Value (FMV) of property | Use appraisal, auction price, or reasonable estimate. |
| Box 5 | Checkbox – borrower personally liable for repayment of the debt | “Yes” if recourse loan; “No” if non-recourse.
Must match W-9 records; avoid mismatches. |
| Box 6 | Property description | Include street address or legal description (for land, vehicles, etc.). |
Note: Borrower and lender’s name, TINs, and addresses are header fields and not a numbered box in Form 1099-A.
Must Know Thresholds, Deadlines, and Filing Rules
Unlike most 1099 forms, there is no $600 threshold here. If there’s a foreclosure or abandonment, it must be reported, no matter the loan size.
Key Deadlines
| Deadline | Action |
|---|---|
| January 31 | Send Copy B to the borrower |
| February 28 | Paper file with the IRS |
| March 31 | E-file with the IRS |
1099-A E-file Rules
The term ‘Property’ in 1099-A means any real property (such as a personal residence), any intangible property, and tangible personal property that is held for investment or used in a trade or business.
File 1099-A if there’s an acquisition or abandonment, even if it’s a small loan. Also, if you’re sending 10 or more information returns (all your combined 1099s, W-2s, 1098s, etc.), electronic filing is a must.
Note: Foreclosure with debt cancellation → file both 1099-A and 1099-C” (not necessarily)
If the foreclosure/abandonment and the debt cancellation (more than or equal to $600) occur in the same calendar year, you may file only Form 1099-C. Completing boxes 4, 5, and 7 on 1099-C satisfies the 1099-A requirement. If you choose to file both, do not complete those boxes on 1099-C.
Record-Keeping
As per the IRS, save copies and supporting documents for at least three years. If backup withholding was imposed, you should keep the documents for at least four years. It’s always better to be prepared if the IRS comes knocking!
Penalties
If you’re late with your filing, the penalties add up. It ranges from $60 to $660 per form, depending on how late you file and if the IRS considers it intentional. To specify, the penalties are $60 (within 30 days), $130 (by Aug 1), $340 (after Aug 1/not filed), and at least $680 per return for intentional disregard (no maximum).
Common Mistakes and Tips to Avoid Them
- Filing only 1099-C when both 1099-A and 1099-C are needed. While filing both the forms, do not fill Box 4, 5 and 6 on 1099-C.
- Reporting incorrect FMV by using book value instead of market value.
- Missing abandoned property 1099-A cases. Sometimes, filers miss situations where the borrower leaves without a formal foreclosure.
- Entering the wrong borrower TIN or no TIN at all.
Prevention Tips
- Always validate TINs using the IRS TIN-matching service.
- Confirm the FMV with solid documentation.
- Train compliance staff on the difference between Form 1099-A vs. 1099-C.
- Use automated e-filing platforms like 1099Online to avoid manual errors and help you meet IRS deadlines.
Real-Life Scenarios
| Situation | What Happened | Required Action |
|---|---|---|
| Home Foreclosure | Lender forecloses on a home with $250,000 balance; FMV determined at $200,000. | File 1099-A showing balance, FMV, and liability. |
| Property Abandonment | Borrower walks away from farmland; lender assumes control. | Must file 1099-A even without auction. |
| Deed in Lieu of Foreclosure | Borrower voluntarily transfers property back to lender. | Still requires 1099-A reporting. |
| Vehicle Repossession | Finance company repossesses the car after non-payment. | File 1099-A with FMV of vehicle. |
| Foreclosure with Debt Cancellation | Home foreclosed with $300,000 balance; lender forgives $50,000 deficiency. | File 1099-A (foreclosure) and 1099-C (canceled debt). |
FAQs
1. Who gets Form 1099-A?
The recipient is the borrower (property owner), while the lender files it with the IRS.
2. If someone receives Form 1099-A, does it mean the borrower owes taxes?
Not directly. Form 1099-A reports foreclosure or abandonment. The tax dues depend on whether any debt was canceled, which is reported on Form 1099-C.
3. Is it possible that a payer is required to file both 1099-A and 1099-C?
Yes. If the property is foreclosed and part of the loan is forgiven, both the forms must be issued.
4. What happens if a payer doesn’t file 1099-A?
It invites penalties ranging from $60 to $660 per form. That’s not all. The IRS might flag the account for audit.
5. Is there a minimum loan balance for 1099-A?
No. If a secured property is foreclosed or abandoned, no matter the balance, Form 1099-A must be filed.
6. Do personal loans require 1099-A filing?
No, only if the lender is engaged in the trade or business of lending.
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