@RS8868 wrote:
thank you for your response. I contacted the lender and they will not withdraw the 1099-C that I am a co-signer on the loan. They are 1099-C debtor and co-signer. Is there a seperate form to fill out to accompany my taxes to state the 1099-C tax is to be reversed and why? I spoke to a local tax preparer and he is stating there must be a proper form and not just a letter.
If you file by mail, the IRS instructions say to leave the 1099 off your return, and attach a copy with a written explanation as to why you did not include it.
When e-filing, the correct procedure is to list the income (canceled debt, it will go on line 8c of schedule 1) and then add a negative adjustment to line 24z with a brief written reason (something like "1099-C not taxable to co-signer"). However, to make the entry on line 24z, you need to access the form directly in the desktop version of Turbotax installed on your own computer from a download.
When e-filing using Turbotax online, you can't access line 24z, so an acceptable alternative procedure is to list the income as canceled debt, then add a negative item of "other taxable income" to offset it. Use the same brief written reason. This will put the negative adjustment on line 8z of Schedule 1 instead of line 24z, but it's what Turbotax recommends when using Turbotax online.
