cancellation of debt exception

[khaiges]

My wife died in January of 2020 with $3,500 of credit card debit in her name.  Due to good financial planning, her estate was very small.   It comprised a piece of land in Florida, which would have to go through probate, and less than $500 in cash.   In fact, the total value of the estate was less than the death expenses owed to me.    Given priority order of creditors,  the credit card company was going to get nothing.   However,   to simplify the probate in FL,  I made an offer to settle the debt for $500 and the credit card company agreed.     The credit card company then sent a 1099-C for $3000 in the name of my wife.    Since I was still married in 2020,  I had planned on filing as married filing jointly.   Isn't there some sort of exception for debts owed by my wife's estate such that I won't have to pay taxes on the $3000 as income?     

[gloriah5200]

Yes, the exception is that the estate debts are not your debts as the surviving spouse of the decedent, except for responsibility as the administrator of the estate.  The 1099-C should have been issued under the estate ein, not your wife's ssn since they were cancelled after her death.  

You should get an ein for the estate of your wife.  The issuer of the 1099C needs to receive the estate EIN and you need to request them to issue a corrected document with the estate ein, not the deceden't ssn since the debt was cancelled after her death

I am assuming you paid the $500 to the credit card company on her estate's behalf out of the estate assets, not your own since you were not legally liable to pay them anything unless you were also a responsible party on the credit card.