Cancellation of Debt Income & Form 982

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  • JG
    Apr, 2014
    Jerry
    This year, my wife received a 1099-C after a student loan debt was cancelled in 2013 for health reasons. Is this taxable income on the federal level? Should we have been paying quarterly taxes in 2013 if it was taxable?
    0 Votes

    • BA
      Apr, 2014
      Bill
      Debt that was forgiven in 2013 will need to be included in the 2013 taxes. I don't believe that there is any need to pay estimated taxes on this kind of tax debt. I suggest that you speak with a tax professional, to see if you can avoid paying taxes on the forgiven debt. You have to meet the IRS standards for hardship, so see if the tax pro believes you meet that test.
      0 Votes

  • AM
    Mar, 2014
    Amanda
    If I borrowed $1million to buy a building & my note was forgive by $300,000 & at the time the building was worth $700,000 and I had $50,000 cash on hand. How much COD income must I recognize?
    0 Votes

    • BA
      Mar, 2014
      Bill
      Your hypothetical does not provide enough information to answer your question. What are your total assets? What are your total liabilities?

      Review the two hypothetical situations in the original answer above to understand how to do the math on a CODI question.
      0 Votes

  • DN
    Mar, 2014
    Di
    I have received 2 1099-C. One is for a total of $70K and the other says "Corrected and $0 amount". The student loan is from almost 10 years ago. My parents went thru bankruptcy and now it says canceled. I'm confused on what to do. What form do I use for my taxes?
    0 Votes

    • BA
      Mar, 2014
      Bill
      From what you described, the best advice I can give you is to take the two 1099-Cs to a tax professional for review. The potential tax exposure for not properly declaring $70,000 in income is too great to rely on the advice of someone online.
      0 Votes

  • PM
    Mar, 2014
    Phyl
    I received a letter from the IRS today saying that I did not file a 1099C with my 2012 taxes. They had the loan number on the back from 1st Citizens bank. Amount $6999. Which they added to my 2012 taxes.I have no loans with Frist Citizens, so I called the bank. This loan was from 1995,,,,almost 18yrs ago, and it was a loan that my ex was to pay for solely as per the divorce decree.. but I got a bill for $1800. First of all.... REALLY 18yrs later, and secondly, why should it solely be MY responsibility. Just a few questions I have about this confusing thing....
    0 Votes

    • BA
      Mar, 2014
      Bill
      Consult with a tax lawyer to learn if the 1099-C issue was filed in a timely manner. I agree, 18 years seems like a long time to raise a tax issue, and confess I do not know if there is something like a statute of limitations rule that applies in your particular circumstances.
      0 Votes

  • BG
    Feb, 2014
    Brit
    I received a 1099-C cancellation of debt letter. Does that mean they will take my tax return?
    0 Votes

    • BA
      Feb, 2014
      Bill
      You're jumping ahead a few steps to something you can avoid easily. A tax offset, which is what the federal government calls a tax return garnishment, may not be in the cards for you.

      Complete an IRS Form 982 with your next federal income tax return to learn how your 1099-C may impact you. Consult with a tax preparation professional to learn if CODI can help you avoid tax liability.
      1 Votes