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got a 1099 c form in the mail about 4000 forgiven debt. how

Customer Question
much tax do i pay...
got a 1099 c form in the mail about 4000 forgiven debt. how much tax do i pay on it?
Submitted: 8 years ago.Category: Tax
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Answered in 17 minutes by:
3/2/2009
Tax Professional: Lev, Tax Advisor replied 8 years ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,141
Experience: Taxes, Immigration, Labor Relations
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What was the reason of debt forgiveness?

Sale of your home? credit card? bankruptcy? others?

 

The amount of debt forgiven reportable on 1099-C - http://www.irs.gov/pub/irs-pdf/f1099c.pdf - generally is taxable, unless an insolvency exemption apply -- you should file a form 982 - to proof your insolvency - and might exclude all or part of canceled debt from taxable income.

Please see the IRS Publication 908 Bankruptcy Tax Guide - http://www.irs.gov/pub/irs-pdf/p908.pdf - with example of the form 982 on the last page.

 

Please do not be misled by the bankruptcy guide - you may be insolvent without filing for bankruptcy....

You need to fill a form 982 - to proof your insolvency - that would be sufficient to exclude canceled debt from taxable income.

 

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