Have Tax Questions? Ask a Tax Expert for Answers ASAP
I am so sorry for your loss.
Please do not be embarrassed; I have seen so many of these this year. People are hurting in this economy and many have much larger balances than yours. Now, let's see how we can help you with this situation.
Your husband basically received forgiveness of debt for $7,795. Now it is very important to bring it to the accountants attention. This is especially true if the 1099 is in both you and your spouses name. If it was only in his name, most of the time the income would have been resolved on the estate tax return (if there was one). If there was not any estate tax return and the 1099-C was in his name only, you probably do not have to claim the income.
Also, see IRS Form 1040 Instructions page 91 for related instructions:
If you have any further questions, please do not hesitate to contact me.
THANK YOU FOR YOUR REPLY. HOWEVER I HAVE A FEW MORE QUESTIONS.
HOW DID $800.00 BALANCE TURN INTO $7795.00 IN 2 YRS? THIS ACCOUNT
WAS ONLY IN HIS NAME. THE 1099-C IS MADE OUT TO HIS NAME ESTATE. I'M
AFRAID MY ACCOUNT WILL WANT TO ADD IT TO MY TAXES THIS YEAR IF I SHOW
THIS TO HIM. HOW LONG DO CREDIT CARD COMPAINES HAVE TO KEEP TRYING TO DO THIS OR COLLECT?
Your husband should not be on your return any longer. Therefore, if your name is not on the 1099 or your social security number, you should not have a problem. So, if you feel better not showing the accountant you can. If you receive a notice, you will need to write a letter to the taxing agency explaining the situation.
I have no way of telling how the balance went from $800 to $7,795. I understand your frustration. Credit card companies do not give up easily. However, if they issued a 1099, they are close. You may want to monitor your credit report to make sure there isn't any negative marks from this situation.