Have a Finance Question? Ask a Financial Expert Online.
Hello, You must report the amount in the other income line at the bottom of the income section unless you were insolvent at the time. If you think you you were insolvent here is a link to a publication 4681 on cancelled debt, you will find a worksheet to calculate your debts and assets. http://www.irs.gov/publications/p4681/ch01.html#en_US_publink1000244090 Thanks Tom
Hello, You are talking about filling out a 982. First you must have been insolvent at the time the debt was settled. 1.Even though you didn't have enough income to pay the debt doesn't make you insolvent. There are two items that keep most people from being insolvent, 1. Equity in their home and 2. The value of their retirement accounts. First fill out the worksheet to see if you qualify. Next, if you do meet the insolvent rule than most tax atributes will not effect you unless you run your own business. You will need to include all of the debt on the return so yes will have to wait for the other 1099's, check with the other companies and see if they are send you a 1099. 2.The excluded debt would be the total of all of the 1099c/. 3. This indebtness is not from Real Property (Real Estate) so the answer is no. 4. This also will be zero unless you own a business. 5. Again unless you arein business you do not have to worry about tax attributes. Debt can be cancelled in 2 ways, the creditor for their benefit offers to reduce your debt if you pay it off early and second you make an agreement to pay the debt for less than you owe. In the first instance the company does not send you a 1099c and does not claim the loss on their tax return. Your is the secound instance and even though it was a settlement they wrote off part of your debt and claim the loss on their taxes and issued a 1099c. Thanks Tom
PS once you are finished answering the question on your tax software print out the 982 and be sure it has recorded everything the way you intended it.