So we filed chapters 7 bankruptcy and was discharged in Jan 2024. Received a 1099-C for a business credit card that was added to bankruptcy (business closed down in 2024). This company did not file a claim and charged off amount of credit card. I attempted to add to turbo tax but it will not allow me to add for a business credit card. It is not a personal use home credit card but wants me to add on business pantry BUT it won’t let me add. No clue what to do or how to add or find that other form 982.
Please clarify - was the 1099-C issued to you personally using your social security number on the form or issued to the business EIN using that number? Because it needs to be included in the income for whichever one of those that it was issued to.
If it was issued to you personally it will go on your personal return through the 'Wages and Income' section of TurboTax. Scroll down to the very bottom of the section to 'Less Common Income' and click start next to 'Miscellaneous Income' at the bottom of that section. On the next screen 'Cancellation of Debt' is about midway down the list. You'll be able to enter the amount of debt as well as tell them that the debt should be removed on form 982.
If it was issued to your business then in TurboTax for Business scroll down in the income section to 'Other Income' and then click start next to 'All Other Income'. On the next screen you'll enter 'Cancellation of debt income' and the amount.
Then, to open form 982 and add it to your return to remove the debt cancellation income, you need to go to 'forms' and search for form 982 and add it to your return.
Ok so 1099-C is listed under our previous business, which has the EIN number as my husband, SSN. And there's absolutely nothing else that we're reporting for the business on our tax return as we stopped the business in 2023. Now when I try to use the personal section (as it has my Husband) SSN for the EIN ) as instructed the drop-down only gives me information if I sold a home repossessed, etc., and none of that is for the 1099C. When I go to the non-personal option part of it, I go to less common income. I go to miscellaneous income, 1099-C, I go to cancellation of Debt 1099-C and I would have to click on another type of Debt. I press continue and it's asking if it's for personal debt and it is not. So I have to click on the bottom part of it non-personal debt, I press continue, and it gives me strict guidelines for a cancellation debt that's not related to the purchase of main home so even if I press continue, it takes me back to miscellaneous income – cancellation of Debt section to do it all over again. So this is where it confuses me
Debt discharged through ch 7 is not taxable. Please verify is this was actually part of the ch 7 discharge- you said added to bankruptcy above. See What if I file for bankruptcy protection? - IRS
Since you filed with his SSN, I believe you have been filing a sch C and the debt is part of your personal return, if it is taxable income - not part of the ch 7.
Yes it was part of bankruptcy chapter 7 that was discharged in 2024.
You can exclude the income due to bankruptcy. Be sure you retain all of the paperwork in case if you are examined by the IRS. Here is how to report.
When I go to #5, it allows me to to click on cancellation of debt, it goes to next page "tell us about your cancelled debt" section. I mark 2nd one stating another type of debt as it's a credit card as it's not on main home 1st part. I click continue, About Your Cancelled Debt portion, and it states IRS strict guidelines lingo, I click continue and it returns to Let's work on any Miscellaneous Income section again and it just starts all over again at #4. It will not allow me to enter the 1099-C information.
It depends. When you were in the screen labeled About Your Cancelled Debt portion, was there a box 2 to enter the income?
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