If you received a 1099-C in 2016, you need to report it on your 2016 tax return.
If you fail to report it this year, the IRS will send you a letter that charges tax on the full amount.
The date for which you need to calculate whether you were insolvent is the date the loan was forgiven, which is printed on the 1099-C. This is often years different from when the loan went bad. The longer you wait to report these numbers, the more difficult it will be to show whether you were insolvent. You will need to be able to list all your assets and all your outstanding loans, rent, utilities, etc. on the date the loan was forgiven.
Should you choose to report the 1099-C this year (and we recommend that you do), you
can attach form 982 to your tax return, but only using the TurboTax
Desktop (TTD) version. You can either buy it online or through a store.
Any version of TTD will work; it will automatically unlock version you
need.?
As superuser rjs noted below, there is not much guidance to completing the form. I suggest that you search online for a fillable insolvency worksheet to
assist you in the process. You are supposed to include not only your
liabilities, including the unpaid debt reported on your 1099-C and any
bills that were due on the date that the debt was forgiven,
but all your assets on that date, from the car in your driveway to the
clothes on your back. The value of clothes and furniture that you should
use is what you might expect to get at a garage sale. Don't sweat this
part - give it your best guess and move on. The most important things to
list are the ones that are easy to document, such as the Kelley Blue
Book value of your car, the balance in your bank accounts, the value of
your house less the mortgage, etc.
