Get your taxes done using TurboTax

Generally, to get Form 982 to generate in TurboTax you will follow the steps listed below.  The IRS has very strict rules for determining whether canceled debt is taxable or not. This is a very complex issue and you should consult a tax professional if you are considering filing Form 982 for exclusion of your taxable debt.

The exceptions to determining a canceled debt as taxable include:

• Debt discharged under Title 11 bankruptcy (including chapters 7, 11 & 13)
• Canceled debt was on qualified farms and real business property
• Debt was canceled due to insolvency (to qualify, you must demonstrate your total debt exceeded the Fair Market Value of all of your assets right before the debt was canceled. Use Insolvency Worksheet in IRS Pub 4681 to determine if you were insolvent)

It is best to use a TurboTax Desktop program to complete Form 982. To switch to a desktop  program in TurboTax you can How do I switch from TurboTax Online to TurboTax Desktop?

1. In your TurboTax Desktop, click on Forms to switch to Forms Mode
2. In your left panel of your TurboTax Screen at the top right above "Forms in my Return" click on the open forms icon.
3. Add Form 1099-C (You may have to delete your Form 1099-C that you entered first before doing this).
4. Enter your Form 1099-C information on Form 1099-C in your right panel of your TurboTax screen
5. In your left panel Click on Canceled Debt Worksheet
6. Complete the section that applies to you.
7. If you are claiming insolvency, you will have to click on the QuickZoom button to complete the statement of insolvency
8. Then select Form 982 in your left panel and complete the sections that apply to you
9. You can then click on Schedule 1 in your left panel to make sure your debt was excluded

Click here for How do I report excludable (non-taxable) canceled debt?

Click here for Guide to Debt Cancellation and Your Taxes

Please return to Community if you have any additional information or questions and we would be happy to help.