If this was a personal loan and you got back the same amount you loaned, you have no income. If there was interest, report it as such.
The IRS in the past has not pursued non-business bad debt. In general, it's always better to have back-up if you need it. Non-business bad debt is reported on Schedule D.
- Report this in TurboTax by using these steps:
- In the search box, upper right type nonbusiness bad debt > Jump to nonbusiness bad debt
- Continue to the screen Choose the type of investment you sold
- Select Uncollectible Debt (Nonbusiness Bad Debt)
- Continue to enter your information.
From DianeW:
You can take a deduction for a nonbusiness debt only if the entire debt is uncollectable. You do not have to wait until the entire debt is overdue to determine whether it is worthless. Nor do you have to file a lawsuit to collect the debt, obtain a judgment against the debtor, and then try, unsuccessfully, to collect on it — a process that can take years.
All that is required is for you to show that there is no longer any chance that the loan will be repaid. Obviously, you must show that you took reasonable steps to collect the debt.
