massachusetts 1099-c insolvency exception

[Kim97]

I have received and entered my 1099-C (cancellation of debt) (it is credit card related)  I have filled out the insolvency exception portion on the federal tax return, but can not find where to fill out for my Massachusetts return.  Does anyone know how to do that?  Or does Massachusetts not have an exception for insolvency?

[DanielV01 · Accepted solution]

What should happen is that the Federal amount of income should carry over to the Massachusetts return.  Massachusetts does not have its own form, but if you exclude income via insolvency on the Federal return, the "carry-over" income will also be excluded from the Massachusetts return.  Keep in mind that Massachusetts can ask for independent proof of the amount of income excluded, so be sure to retain good records of what you are claiming.

[Kim97]

Thank you!!!!!

[Kim97]

Hello!  My MA return is pulling the entire amount of the cancelled debt over as income, not the amount that is showing up on my federal return as income (which is the entire amount LESS an insolvency credit).  I can't find where I have made an error - can you recommend what/where to check?

[DanielV01 · Accepted solution]

Massachusetts reports this type of income on Schedule X.  I'm not 100% certain of the navigation in the program, but if there is a "Massachusetts Adjustments" section, you can input the deduction of the insolvency there.  When these manual adjustments are made, it is likely you have to mail in the return, and be prepared to share your insolvency worksheet with the state.

[Kim97]

Thanks again - you've really helped!

[DanielV01]

You are welcome!