What’s a 1099-C?

If you receive a 1099-C in the mail over the next month or so and you are confused, think back. You are receiving this form because you have had a debt forgiven. And yes, it is taxable, or at least reportable. If you owed on a credit card and the credit card company “forgave” your debt, the company will generally issue a 1099-C. This income must be reported on your tax return. It is possible to have this income waived or excluded if you happen to be insolvent at the time the debt was forgiven or if you have filed for bankruptcy. This can be done on Form 982, something that is really best left to a very competent tax preparer. Ask if the preparer has actually done one before and/or feels comfortable with the form.

In addition, if you happen to receive the 1099-C because you were unfortunate enough to loose your home, then there is at least some good news for you. Discharge of debt due to home foreclosures, loan modifications, etc. are not taxable income in 2013. However, they are reportable. It will be shown on your tax return with an exception. It’s probably another situation where the average tax payer could use the services of a good tax preparer.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s