I was the co signer on a student loan. The debt has been canceled. Total cancelled debt of 11,400. Who reports as income? Primary, co signer or both?

Forum|Forum|7 years ago
June 6, 2019
3 replies
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TurboTax Deluxe Online

FaithY

Level 7

The student should file the 1099-C because the student is the debtor. The co-signing parent is a guarantor not a debtor according to the IRS (https://www.law.cornell.edu/cfr/text/26/1.6050P-1)

The co-signing parent should not receive a 1099-C and you should contact the creditor and ask for a corrected 1099-C if you the co-signing parent receive a 1099-C. If the creditor refuses to correct the 1099-C issued to the co-signing parent, the co-signer will need to attach a note to their tax return with an explanation.

Steph16

Level 2

How do you attach a note (to insure they actually read it) explaining you were the co-signer not the debtor on your son’s cancelled student loan? Do you claim 0 for the cancelled debt on your tax return?

RobertG

Level 12

If you can't get the issuer of the 1099-C to correct it, you should paper file and attach a note and explanation to your return.

The IRS will probably not read it unless they decide to question your return.

You should report the 1099-C on your return, and then report an identical amount under 'Other Income' as a negative number.

To enter 'other Income' in TurboTax:

Go to Income & Expenses
Select Miscellaneous Income
Then Edit Other reportable income
Enter the amount as a negative number to offset the cancelled debt income you reported.
The negative number will appear on line 8 of Schedule 1

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