Canceled debt....

[dont-undy]

I got a letter with cancellation of debt form 1099-C 2021 almost 2 weeks ago and I already fill out tax return with TurboTax last month early. Now got another form lately I don't understand why so I tried to find contact number or live chat with tax professional about it but I can't find anything where I can contact? stupid things they don't have provide number or live chat huh??

I hate that IRS whatever! If tax professional that mean I have to pay for service? I wouldn't! I dunno because I am on Social Security so here is letter says: Good news - one of your creditors has written off your debt, which means they canceled or discharged the account. As a result, the creditor issued a Form 1099-C, Cancelation of Debt, which we are forwarding to you. Because the creditor issued you this form, you might need to report any taxable amount of a canceled debt as income on your personal tax return. However, you might not have to include forgiven debt on your tax return if you were insolvent - meaning your liabilities exceeded your assets. If this applies to you, fill out IRS form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness. Additional information related to canceled debts can er found on the IRS website: https//www.irs.gov/forms-pubs/about-publication-4681
We encourage you to contact a tax professional to understand how this affects your tax situation.

I used with TurboTax does figure it out for me while fill it out easy than write fill papers more complication for me I can't do that like 982 form so need your help or suggest?

[ColeenD3]

Basically what you are being told is that someone canceled your debt. This is taxable income. However, if you can show that you were insolvent, your debt is reduced by your insolvency. You have to do the worksheet to see if you were insolvent. WORKSHEET

[Opus 17]

If you already filed your tax return, you may need to file an amended return.  Here's how to do that

https://ttlc.intuit.com/community/tax-return/help/how-do-i-amend-my-2021-return/00/2544441

Basically, a canceled loan is considered taxable income.  You got free money that you didn't pay taxes on, because you promised to pay it back.  Now that you don't have to pay it back, that free money is considered taxable income to you, even if it was spent on other things long ago.  Read here for more.

https://turbotax.intuit.com/tax-tips/debt/guide-to-debt-cancellation-and-your-taxes/L9YsOVhgB

If you are currently insolvent (unable to pay your debts because they are so much larger than your income) then you don't have to pay tax on the canceled loan.  But, you do have to report the canceled loan on your tax return and include the extra form 982 to show insolvency.  Turbotax online does not include form 982, so you may have to see a tax professional if you think you can avoid tax by declaring insolvency.  You may be able to include form 982 with your tax return if you are using the turbotax program installed on your own computer from a CD or download.