Then that amount is considered income and typically has to be included on your tax return.However, the event code “E” means the debt was canceled due to probate or similar proceeding, according to the Internal Revenue Service. It’s interesting that the bank waited six years to file a Form 1099-C, unless it hadn’t noticed until recently that he had passed.It doesn’t matter why the bank waited so long to send a Form 1099-C.Your name is not on the Form 1099-C, and you are not filing a joint return with your husband at this point.“You can live with just cash and live more locally,” Rohrbaugh says. That means shopping at a local merchant rather than going online.But, Rohrbaugh notes, “there are little difficulties that will just drive you nuts, like renting a car.” That has been the experience for Kim Tracy Prince, 42, a Los Angeles area blogger for Mint.com, who went credit card-free on November 1 and is working hard to curtail debit card use (https://com/blog/). I take my kids to school.” Traveling, on the other hand, will be an issue, she says.If surviving spouses are liable for “community debt,” the reasoning goes, they are required to report income from the cancellation of debt as well.The IRS instructions for canceled debt in Publication 4681, however, do not say anything about community property rules.
The community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin and Alaska – an opt-in community property state.Hoffman, 52, says an occasional online purchase and buying an airline ticket are the only uses for her sole debit card, which sometimes serves as a second form of ID.It’s a relief not having a credit card, says the California resident, who has worked as a schoolteacher and as a companion to an elderly man. “There’s a freedom in not having bills.” A side benefit, Hoffman says, is not getting junk mail.Prince admits it was a great relief to know she shopped at Target using cash and is unburdened by what’s hanging over the heads of tens of millions of others who paid using plastic. “How would you even go about purchasing a plane ticket with cash? One tactic for buying online without a credit or debit card involves using the online service Pay Pal – although consumers must provide that company with bank account information.She says she has shifted some online purchases to local stores and finds that being in her community makes it easier to keep to a cash-based spending plan. Another means of spending without connecting your identity to your transactions is to use prepaid cards branded by a major credit card issuer such as Visa or Master Card.As much as she has enjoyed living mostly off the plastic grid, she doesn’t see herself getting rid of the debit card entirely.MAKING THE SHIFT The move away from cards can be done, says Tim Rohrbaugh, chief information security officer at Virginia-based identity theft prevention and remediation firm Intersections Inc.According to the FDIC, most of those people are lower income and overwhelmingly don’t feel as though they have enough money to maintain a bank account.Even for the middle class, switching to an all-cash lifestyle isn’t completely radical.Some other things sacrificed without a card include not being to pay for something in an emergency and losing out on rewards – something only of value to those who pay off their credit card balances each month and avoid interest charges.While Hoffman says her decision to ditch credit cards and mostly avoid using a debit card was right for her, “it’s not for everybody.” (The author is a Reuters’ contributor.