I have a 1099 C for a forgiveness on a second mortgage for my primary home. It was granted in Aug 2017 per the form I received.Is this taxable income?

[chona105]

I received the original paperwork that my debt was forgiven in July 2017. However the 1099C says aug 2017. It's a second mortgage. My ex husband also received a form for the same amount bc the mortgages are in both our names. But he received a 1099c under his name alone with the SAME amount. Do we split the amount???how does this get entered?? I file HOH w my kids.

[chona105]

OK, I AM EXEMPT FROM INCLUDING THIS AS INCOME. I QUALIFY DUE TO INSOLVENCY. I WAS TOLD I NEED FORM 982. I ENTERED THE 1099C IN THE SYSTEM: ON MY MAIN HOME. TYPE OF TRANSACTION :OTHER TRANSACTION . YES I HAD A SECOND MORTGAGE USED FOR THE HOME.WHEN I GET TO TELL US ABOUT YOUR MAIN HOME" I GET STUCK BECAUSE NONE OF THOSE SEEM TO BE THE REASON YET I DO NOT SEE WHERE TO PROMPT THE 982...WHAT AM I DOING WRONG??

[CassandraLO]

Please see this link: <a rel="nofollow" target="_blank" href="http://intuit.me/2HcLHmG">http://intuit.me/2HcLHmG</a>

[kaylap-1]

thank you so much

[kaylap-1]

Cassandra i read the link and this part has me confused because it contradicts publication 4681:
"To qualify, the debt must be on your primary residence (not a second home, investment, or rental property) and forgiveness must have been granted between January 1, 2007 and December 31, 2017, both dates inclusive." (true in my case)
Pub 4681 pg 9 states "IF your debt was discharged after 2016, you can't exclude it from income as qualified principal residence indebtedness unless discharge is subject to an arrangement entered in writing BEFORE JAN, 1, 2017."

[CassandraLO · Accepted solution]

This is clearly outside the scope of tax preparation software support. I would consult with your attorney who participated structuring your divorce settlement.

Please see the links below for additional information:

http://bit.ly/2sf3q9p

http://bit.ly/2GRtef8

Cancelled, forgiven, and discharged debt is considered taxable income, unless it qualifies for an exclusion or an exception.

Normally the debt is reported on Form 1099-C. Make sure you enter your 1099-C in TurboTax even if it qualifies for an exclusion or an exception.

Exclusions

•     Cancellation of qualified principal residence indebtedness, better known as mortgage debt relief
•     Debt cancelled in a Title 11 bankruptcy;
•     Debt cancelled during insolvency (the amount exceeding your assets);
•     Cancellation of qualified farm or real property indebtedness.

If the debt qualifies for any of these exclusions, TurboTax will complete Form 982 and include it with your return.

Exceptions

•    Certain qualified student loans;
•     Money excluded from income by law, such as gifts or bequests;
•     Cancelled debt that if paid by a cash-basis taxpayer would otherwise be deductible;
•     A qualified purchase price reduction given by a seller;
•     Any Pay-for-Performance Success Payments that reduce the principal balance of your mortgage under the Home Affordable Modification Program.

Tip: If your creditor is still trying to collect on your debt, it's not considered cancelled, forgiven, or discharged. There is no taxable income to report, not even if you got a 1099-C from the creditor.

To enter your 1099-C:

1.     Open (continue) your return, if it's not already open.
2.     In the TurboTax program, search for 1099-C or 1099C (lower-case also works) and then click or tap the "Jump to" link in the search results
3.  Select the type of cancelled debt (main home or other) and then click or tap Continue.
4.  If using Free Edition, follow the prompts to upgrade to Deluxe.

    Follow the onscreen instructions to enter information from your 1099-C.