If you use the TurboTax Desktop product to complete the amended return for the oldest year 2021 first and then progress forward to amend the following years it should pick up the changes from the prior year amend. In the TurboTax Online product it would not pick up the corrected amounts automatically and you would have to make the corrections as part of amending the following years.
Cancelled debt is when one of your creditors canceled a debt you owe, meaning the company writes it off and you no longer have to pay it back. For example the bank cancels your credit card, stops collection attempts on the balance owed and writes it off the banks books. That is considered cancelled debt. When the creditor writes it off their books, they will normally issue a 1099-C for the amount of the cancelled debt which you will need to report as income on your return. Cancelled debt is considered income by the IRS.
Cancelled Debt Exceptions
- Debts you no longer have to repay because of a gift or a bequest made in a will. For example, suppose you borrow money from a friend and sign a promissory note. If your friend passes away and relieves you of your obligation to repay the loan in his will, the debt cancellation isn’t taxable.
- The cancellation of student loan debts resulting from your employment with a government agency or with an educational institution. And if your mortgage balance is reduced under a Home Affordable Modification Program, you don’t have to report it on your tax return.
Helpful links:
Guide to Debt Cancellation and Your Taxes
Debt Cancellation and Your Taxes Explained - TurboTax Tax Tip Video
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