Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax
This answer was rated:

Re: debt cancelation income - credit card Preparing 2011

Re: debt cancelation income -...
Re: debt cancelation income - credit card

Preparing 2011 tax return w/ turbo tax. Settled credit card debt for lower than balance. debt cancelation income: $1,523.

If I don't have this my return goes up $35 appx. Nothing big at all but I'd like to get that $35 put use knowledge gain to help in future. My mother had very low income last year...appx $16,000. She had one dependent and will get a refund (paid taxes plus EIC) of about $2,700.

So considering her very low income and age 65 I'm assuming so way to avoid this debt cancelation income. Turbo tax says if you think you qualify for an exemption to contact tax professional. The program doesn't give options to click exemption but I'm sure I can open up individual forms in turbo tax and hard type info that will update the entire return.

Comments to avoid debt cancelation of income?
Show More
Show Less
Ask Your Own Tax Question
Answered in 3 minutes by:
7/3/2012
Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 7,211
Experience: Extensive Experience with Tax, Financial & Estate Issues
Verified

Stephen E. Grizey :

Hi & thanks for using our service. I'll do my best to give you a complete & accurate answer. Please ask me to clarify anything you don't understand.

Stephen E. Grizey :

Unless you were insolvent (liabilities exceeded assets) just before the debt cancellation, you aren't going to qualify for any exclusion. You'll need to report the income.

Stephen E. Grizey :

I'm sure that's not what you wanted to hear, but unfortunately that is the situation.

Stephen E. Grizey :

Please remember to rate my response in order that I can receive credit for my work; I'll be pleased to answer any follow-up questions you may have either before or after you rate my response.

Stephen E. Grizey :

Questions?

Stephen E. Grizey :

The following link is to the Form (982) that you would file to claim the exclusion, if you did qualify.

Stephen E. Grizey :

http://www.irs.gov/pub/irs-pdf/f982.pdf

Stephen E. Grizey :

If you look at Part 1 of the form, you will see the circumstances that would qualify for the forgiveness;

Stephen E. Grizey :

As you can see, the only possible exclusion for you and your credit card cancellation income would be insolvency.

Customer:

and claiming insolvency when she is going to get a refund of appx $2,700 wouldn't make any sense I'm assuming. unless of course she has lots of debt w/ no assets to pay them with. For example, if she has $20K in credit debt but only liquid asset would be the $2,700 then she might qualify?


 

Customer:

She thankfully doesn't have other credit card debt (at least that isn't collectable at this point) so insolvency I guess won't work. BUT in the future all I have to remember is I can claim this exception IF taxpayer is insolvent (Liab > assets)?


 

Stephen E. Grizey :

Who received the debt forgiveness income?

Customer:

my mom


 

Stephen E. Grizey :

Does she own a home?

Customer:

no - rent apt


 

Stephen E. Grizey :

In the beginning of your question, why are you referring to your return ie. the $35,?

Customer:

mistake. it's her return

Stephen E. Grizey :

OK

Stephen E. Grizey :

Insolvency means all of her assets; cash, jewelry, personal property, car, etc.

Stephen E. Grizey :

Are you typing? Chat has been acting up lately?

Customer:

hi


 

Customer:

ok: so insolvency means all assets - cash/jewelry/etc MORE than all liabilities?


 

Stephen E. Grizey :

yes, assets more than liabilities means you are solvent;

Customer:

ok - well she recently was given a small amount of land,not worth much but would knock her out of being insolvent.


 

Customer:

okay you answered my question


 

Stephen E. Grizey :

& wouldn't qualify for the exclusion

Stephen E. Grizey :

great

Customer:

I know what would qualify in future too.


 

Stephen E. Grizey :

Please remember the rating

Customer:

ok thanks.


 

Stephen E. Grizey :

Only if the law is extended

Stephen E. Grizey :

Right now it is good through 2012 only

Customer:
Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 7,211
Experience: Extensive Experience with Tax, Financial & Estate Issues
Verified
Stephen G. and 87 other Tax Specialists are ready to help you
Ask your own question now
Ask Stephen G. Your Own Question
Stephen G.
Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 7,211
7,211 Satisfied Customers
Experience: Extensive Experience with Tax, Financial & Estate Issues

Stephen G. is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,310 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,695 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
On october 30th I mailed form dt individual to the IRS in
on october 30th I mailed form dt individual to the IRS in Connecticut Certified mail showed it had been delivered on Nov 2 I have heard nothing … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
I can't find my 2016 Turbo tax return. Help! Dell. None
None since I completed my tax return. All returns from previous years on stored in Documents. … read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,458 satisfied customers
Are you familiar with income tax laws on business and
Are you familiar with income tax laws on business and personal returns? … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Can I report rental income in my tax return on a property
Can I report rental income in my tax return on a property thar is owned by my father? He does not live in the US is not a US citizen and can sign a document to allow me to receive the rental… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
Can individual take residential rental property losses on
Can individual take residential rental property losses on their tax returns … read more
abci168
abci168
Principal
27 satisfied customers
Adjusted individual tax return for 2014(Iowa),says no
Adjusted individual tax return for 2014(Iowa),says no response to letter of inquiry,disallowed health insurance. deduction.says my wife and I owe$600.00.she called # and was told to show proof of insu… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Sell of property tax liability. Ca. Bought home 25 yrs ago
bought home 400,000 selling 2.5 mil. Invested 500,000 owe 800,000… read more
Richard
Richard
Tax Attorney
Doctoral Degree
4,310 satisfied customers
An S Corporation is selling its assets under an Asset
An S Corporation is selling its assets under an Asset Purchase Agreement. The 2 stockholders materially participate in the operation of the business. The business provides credit card processing softw… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Wife owns property individual, picks up rental income on
wife owns property individual, picks up rental income on Sched E - husband and wife live together in another home. Wife wants to rent husband the house for his business - both Sched C - does this make… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
I successfully filed my 2016 return with Turbo Tax. Now the
I successfully filed my 2016 return with Turbo Tax. Now the only file references that I find are " Usaved Turbo Tax document" which does not open. Anyway I can get to this doc for use or view? … read more
Stephen G.
Stephen G.
Sr Income Tax Expert
7,211 satisfied customers
How do I request my 2016 Individual Personal Income Tax form
Sir, how do I request my 2016 Individual Personal Income Tax form (form 1040) on line? … read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,458 satisfied customers
Company A transferred assets and liabilities to a newly
Company A transferred assets and liabilities to a newly formed Company B … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Ok Chad - Based on liability there is case law that whatever
Ok Chad -Based on liability there is case law that whatever entity comes in first is the one that gets paid first ...So I've had court orders for child supp since 2013. The $3M tax deficiencies are no… read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
723 satisfied customers
Can franking credit on an Australian income tax return be
Can franking credit on an Australian income tax return be used on Form 1116 as tax paid on the franked distributions? … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
I filed my taxes with Turbo Tax and submitted the forms with
I filed my taxes with Turbo Tax and submitted the forms with E-File on April 11. A few days later I received an e-mail saying that my file was rejected due to a Turbo Tax problem, so following instruc… read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,217 satisfied customers
Can an individual person that has a property in their
can an individual person that has a property in their business (sole proprietorship) name execute a quit claim deed to a relative. Or does it need to be transferred to the individuals name first and t… read more
Matthew Breecher
Matthew Breecher
President
MBA (Graduate Legal Studies)
285 satisfied customers
Is a 1040 US Individual Income Tax Return federal income
Hi Is a 1040 US Individual Income Tax Return federal income taxes owed to the US government? Or is it FICA? I received a letter owing some back taxes and since I'm a priest with a weird set of tax exc… read more
ABC Accounting Group
ABC Accounting Group
Bachelor\u0027s Degree
682 satisfied customers
There is no credit on Illinois personal tax return for
There is no credit on Illinois personal tax return for property tax paid for vehicle, correct? Thanks,… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x