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what is form 982 and what should i do on 1099 c form based on credit card?
Question : what is form 982 and what should i do on 1099 c form based on credit card?
It lend to a confusion of the 1099c form for credit debt.
One of the H&R associate was having trouble with 1099c.
we received it by mail and it say amount was 1,109 and he say it was a small amount that we didn’t have to put it in the system and date was on oct.2008 that it was late. wasn’t a big deal to put it in,
but we suggested to put it in the system in case irs come back at us about it..
he say there was another option to avoid by finding what we owed and in a higher amount like cars, house etc.. but we only owe a car, no houses, but he say our car was in a low amount since we only
have two months to pay it off.. with a confusion, his explanation wasn’t understanding very well, and maybe someone out there understand
what he was trying to say..and the form 982, i couldn’t find much info about it what it is but it was another form he was looking into to avoid the 1099c.
i understand it is forgiveness but it also deducting the amount in the w2 amount.
so is possible avoid it like he say it would?
credit card debt forgiveness
Best answer:
Answer by Judy1
If you were insolvent, for example bankrupt, then there’s some possibility the amount wouldn’t be taxable to you. But otherwise it’s taxable income for debt cancellation, and the Block person screwed up.
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#2 written by v b 1 year ago
Get out your copy of the tax return.
There are only 2 ways to do this.
1. Include the 1099-C as income. This increases your income for the year and causes you to either owe more in tax (less refund) or qualify for less EIC (less refund). Even if I think someone is insolvent, I check to see how much they would owe if the amount was simply included in income. If the difference if $ 100, you probably would spend more to have the 982 filled out.
2. Determine that you are insolvent. This is done by adding up EVERYTHING you own (a tedious task) and figuring out if you sold it how much money would you have. Then you add up all of your debts, including the cancelled one and determining if you could have paid everybody off. If you can, then you aren’t insolvent. If you can most of it off, but are short $ 500, then you are insolvent for $ 500 and the rest is still income. If you would still off by more than $ 1109, then you are totally insolvent.
After determing that you *are* insolvent, you do the lists again, post cancelled debt and put down what you paid for everything (not what it’s worth). If you still owe more than you have, you don’t put anything in part II of the 982, but you attach a letter showing your math and why you didn’t. If you appear to have more assets than debt, you start “reducing them”–this doesn’t make you owe now, but if you ever sell the item that you reduced, you’d have a gain and have to add it to income then.
See IRS pub 4681 and read all of the examples if you think you want to amend and use the form 982.
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Dear M: The amount listed on 1099C is normally included in income.If your cancellation of debt applies to your primary residence you may be able to exclude some of this money. See IRS publication 17 page 107.This procedure is new and somewhat complicated . Seek professional tax advice.
This advice was prepared based on our understanding of the tax law in effect at the time it was written as it applies to the facts that you provide. Click on my profile to read more.
Errol Quinn Enrolled Agent Master Tax Advisor