@eindiener wrote:
thanks.
For the sake of honesty, I want to be sure I may claim loss from a bad debt: I had a close friend (Stephanie) in crisis & living at extended-stay hotels. I was generous in helping her with rent, etc. mostly in 2018-2020. My last loan to her was $800 for her & her roommate's 1st month of rent in affordable housing in 2020. Then Stephanie died in March 2021. I understand I can take a deduction for a nonbusiness bad debt only "if the entire debt is uncollectable. I don't recall her repaying anything after moving into affordable housing. However, at least 3 times in 2019 she was able to give me cash to cover the majority of 3 weeks' rent. Those 3 cash reimbursements are not considered "repayment of debt", are they? I doubt I'm going to get repayment from the roommate she had in 2020. Since I made several payments for her/their rent, I'd like to consider this "a series of loans" rather than "1 cumulative loan"; is that ok? (If Stephanie's 3 cash payments toward 3 weeks' rent in 2019 might be considered "repayments", should I refrain from claiming those 3 weeks as bad debt?) Can I please get feedback to verify if I may honestly claim this as bad debt? Also, I've already bought "TURBOTAX LIVE DELUXE TAX YEAR 2020"; can I use Deluxe to claim this? thanks
@eindiener wrote:
thanks.
For the sake of honesty, I want to be sure I may claim loss from a bad debt: I had a close friend (Stephanie) in crisis & living at extended-stay hotels. I was generous in helping her with rent, etc. mostly in 2018-2020. My last loan to her was $800 for her & her roommate's 1st month of rent in affordable housing in 2020. Then Stephanie died in March 2021. I understand I can take a deduction for a nonbusiness bad debt only "if the entire debt is uncollectable. I don't recall her repaying anything after moving into affordable housing. However, at least 3 times in 2019 she was able to give me cash to cover the majority of 3 weeks' rent. Those 3 cash reimbursements are not considered "repayment of debt", are they? I doubt I'm going to get repayment from the roommate she had in 2020. Since I made several payments for her/their rent, I'd like to consider this "a series of loans" rather than "1 cumulative loan"; is that ok? (If Stephanie's 3 cash payments toward 3 weeks' rent in 2019 might be considered "repayments", should I refrain from claiming those 3 weeks as bad debt?) Can I please get feedback to verify if I may honestly claim this as bad debt? Also, I've already bought "TURBOTAX LIVE DELUXE TAX YEAR 2020"; can I use Deluxe to claim this? thanks
Sorry, but personal bad debts were eliminated for tax years 2018-2025 by Congress Only businesses can claim a bad debs to their business.
You also cannot issue a 1099-C since you are not in the business of giving credit - such as banks or credit card companies. Personal bad debts can only be recorded by litigation - but unless you have a signed contract with the room-mate, you have no case.
This is a legal issue - ask an attorney.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
