topic Received a 1099 C in Education

Received a 1099 C

gdelong — Mon, 28 Feb 2022 03:55:37 GMT

I refinanced my private school loans through another lender and they purchased them out of collections. I am paying them through the new lender. No portion of the loan amount has been forgiven by the prior lender and the balance remains outstanding in full but the prior lender sent me a 1099 C for Cancellation of Debt. How do I report that no amount of this loan was discharged on my 2021 tax return in turbotax?

Re: Received a 1099 C

Hal_Al — Mon, 28 Feb 2022 13:16:44 GMT

If you received an erroneous 1099, you have several choices:

Ideally, you get a corrected 1099-C from the payer
Don't report it on your return. Attach a copy of the 1099 and a statement explaining the circumstances. You can't e-file. From the IRS instructions for form 1099-Misc: Form 1099-MISC incorrect? If this form is incorrect or has been issued in error, contact the payer. If you cannot get this form corrected, attach an explanation to your tax return and report your income correctly.
Report the income as misc line 8z, Schedule 1 income Then enter a line 8z deduction, for the same amount. In TurboTax (TT), enter at:
- Federal Taxes tab
- Wages & Income
Scroll down to:
-Less Common Income
      -Misc Income, 1099-A, 1099-C
       - On the next screen, choose – Other reportable income - Answer yes to Any other Taxable Income -On the next screen, Enter the number Briefly explain at description. Call it something like "erroneous 1099-C". Then make a negative entry. In TurboTax (TT), enter at (same place):
- Federal Taxes tab
- Wages & Income
Scroll down to:
-Less Common Income
      -Misc Income, 1099-A, 1099-C
       - On the next screen, choose – Other reportable income - Answer yes to Any other Taxable Income -On the next screen, Enter the number with a minus sign (-) in front. Briefly explain at description. Call it something like "adjust erroneous 1099-C"
Do nothing and hope you can explain it away when & if the IRS contacts you

Re: Received a 1099 C

ColeenD3 — Mon, 28 Feb 2022 13:22:23 GMT

There is no way. You have to contact the issuer and have them issue a new form with the amount zeroed out. If you omit it, you will hear from the IRS. If you can't get a new form, you will have to prove documentation to the IRS when they question it.