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Tax question: 12 years ago I filed 13 bankruptcy. Well I

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tax question: 12 years...
tax question: 12 years ago I filed for chapter 13 bankruptcy. Well I wasn't able to complete the 5 year program, so it was closed. Now I after 2014 tax returns I got audited. Turns out Discover card sent a 1099 c that I didn't receive to add to my return. So now irs is attaching interest & penalties. Question: Is there a time frame when a credit card can do this? Since it was 12 years ago
Submitted: 1 year ago.Category: Tax
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1/1/2016
Tax Professional: Robin D., Senior Tax Advisor 4 replied 1 year ago
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15,892
Experience: 15years with H & R Block. Divisional leader, Instructor
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Hello

Code H on the 1099C is used for "expiration of nonpayment testing period." Creditors use this code if you haven't made a payment on a debt in the last three years, and they haven't made a significant effort to collect in the past year.

Creditors have the advantage about when to report canceled income to the IRS.

Statutes of limitations vary by state and by type of debt, but creditors are not required to file a 1099-C during the time they can continue to try to collect on a debt.

The IRS advised you to look to form 982 because you may be able to claim insolvency and not actually pay tax on the forgiven debt.

For simple canceled debt, like from credit cards, you just check Box 1b, and at Line 2 fill in the amount of canceled debt reduced by your insolvency.

After you view my response, please post if you need more information or if you need no further clarification a positive rating is appreciated.
I know rating takes an additional step and I truly appreciate it when you take the extra time!

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Tax Professional: Robin D., Senior Tax Advisor 4 replied 1 year ago

If you have any other questions, please ask me – I’ll be happy to respond. Thank you!

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