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Debt Relief – Insolvency – Bankruptcy Information » Insolvency » how to claim insolvency(sp?) on a 1099-C – Cancellation of Debt?

how to claim insolvency(sp?) on a 1099-C – Cancellation of Debt?

According to my debt settlement company, we may not have to pay taxes on a 1099-C we received if the total amount of our assets were less than the total amount of the settlement. Which it was by a wide margin. I’m doing my own taxes, so I don’t know how I would go about trying to claim this insolvency. The lady said she’d imagine I’d need a form to fill out, but which one she wasn’t sure. Anyone know anything about this?

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2 Responses to "how to claim insolvency(sp?) on a 1099-C – Cancellation of Debt?"

  1. Wayne Z says:
    Form 982

    This form may or may not be available in most software packages.

  2. Sharon T says:
    You can find the form and worksheets you need by going to http://www.irs.gov and searching for it. Do read all the information carefully.

    In many cases you will need to pay tax on part or all of this settlement amount, but the only way you’ll know for sure is to run through the process.

    This may be a year when it will be worthwhile to engage a qualified tax professional.

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