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Antonyfarfan
New Member

1099c cancellation of debt

My mother-in-law received a 1099c cancellation of debt form. It lists her name only and the total amount of debt ($17,000+) forgiven from an auto loan. The problem is that the auto loan had a cosigner (a relative, not a spouse). The cosigner also received the exact same form in their name only for the total amount of debt ($17,000+) forgiven.  Should they both include the 1099c on their respective individual tax returns? Can they split it? It doesn't make sense for my mother-in-law to pay taxes on $17,000+ and the cosigner to also pay taxes on $17,000+ simultaneously when only one debt of $17,000+ was forgiven... 

1 Best answer

Accepted Solutions
KurtL1
Expert Alumni

1099c cancellation of debt

Per Publication 4681 - Canceled Debts, Foreclosures, Repossessions, and Abandonments, if you and another person were jointly and severally liable for a canceled debt, each of you may get a Form 1099-C showing the entire amount of the canceled debt. However, you may not have to report that entire amount as income.

 

The amount, if any, you must report depends on all the facts and circumstances, including:

  • State law;
  • The amount of debt proceeds each person received;
  • How much of any interest deduction from the debt was claimed by each person;
  • How much of the basis of any co-owned property bought with the debt proceeds was allocated to each co-owner; and
  • Whether the canceled debt qualifies for any of the exceptions or exclusions described in this publication.

The debt was for a car loan. The individual that had possession of the car would be the individual that would claim the full amount of the debt cancellation.

 

The other individual, that received the Form 1099-C, will need to mail in their return and attach a statement stating the they are not responsible for any part the joint debt on the Form 1099-C. They should list the name and social security number of the other individual and state that that person is including the entire amount of the debt on their return.

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7 Replies
KurtL1
Expert Alumni

1099c cancellation of debt

Per Publication 4681 - Canceled Debts, Foreclosures, Repossessions, and Abandonments, if you and another person were jointly and severally liable for a canceled debt, each of you may get a Form 1099-C showing the entire amount of the canceled debt. However, you may not have to report that entire amount as income.

 

The amount, if any, you must report depends on all the facts and circumstances, including:

  • State law;
  • The amount of debt proceeds each person received;
  • How much of any interest deduction from the debt was claimed by each person;
  • How much of the basis of any co-owned property bought with the debt proceeds was allocated to each co-owner; and
  • Whether the canceled debt qualifies for any of the exceptions or exclusions described in this publication.

The debt was for a car loan. The individual that had possession of the car would be the individual that would claim the full amount of the debt cancellation.

 

The other individual, that received the Form 1099-C, will need to mail in their return and attach a statement stating the they are not responsible for any part the joint debt on the Form 1099-C. They should list the name and social security number of the other individual and state that that person is including the entire amount of the debt on their return.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
JW47
Returning Member

1099c cancellation of debt

I received a 1099C for a truck loan my ex husband and I had before our divorce in 2015.  In the divorce he kept the truck and I kept our other vehicle. He still has possession of the truck. Does he file the whole cancellation amount, and I file none, since he is still in possession and I have no benefit or income with the truck?

JeffreyR77
Expert Alumni

1099c cancellation of debt

As @kalehnhardt2 posted Jan 28 2020, if you both received a 1099-C and were both jointly and severally liable for the debt, you can take this approach:: 

 

 

Per Publication 4681 - Canceled Debts, Foreclosures, Repossessions, and Abandonments, if you and your ex were jointly and severally liable for a canceled debt, each of you may get a Form 1099-C showing the entire amount of the canceled debt. However, you may not have to report that entire amount as income.

 

The amount, if any, you must report depends on all the facts and circumstances, including:

  • State law;
  • The amount of debt proceeds each person received;
  • How much of any interest deduction from the debt was claimed by each person;
  • How much of the basis of any co-owned property bought with the debt proceeds was allocated to each co-owner; and
  • Whether the canceled debt qualifies for any of the exceptions or exclusions described in this publication.

The debt was for a truck loan. The individual that had possession of the truck would be the individual that would claim the full amount of the debt cancellation.

 

You will need to mail in your return and attach a statement stating that you are not responsible for any part the joint debt on the Form 1099-C. You should list the name and social security number of your ex and state that that person is including the entire amount of the debt on their return.

 

TONYROTAXES
New Member

1099c cancellation of debt

I included 1099 c as income but i do not see it in other income

 

WendyN2
Level 7

1099c cancellation of debt

If you've entered the 1099-C properly, you should see it on your Schedule 1 of your 1040. That forms' total net figure then gets reported on page 1, line 8, of your 1040. 

 

The correct location to enter your 1099-C information can be found by following this path:

 

Personal > Personal Income > Less Common Income > last line item Miscellaneous Income, 1099-A, 1099-C

tamimylove46
New Member

1099c cancellation of debt

submitted my returns for 23018 and 2019 late

irs returned 2019 with green form #3531, said the return was   not signed, also shows circled  "total income" 7 b shows -$12,477, . Then attach supporting documents for your entry of $4,631 for federal income tax withheld. This may be a form w2, form w2g, form1099 or substitute form w 2  for example a copy of an earning statement with year end totals

So not  sure whats this means, as I followed the fill in process with forms I had in my possession. It also says not to sign green form but assuming 

but how do I get on live????

8Aadjustments of

JeffreyR77
Expert Alumni

1099c cancellation of debt

The IRS is looking for you to provide them a signed copy of your 2019 tax return along with the documents you used that have the withholding that shows you had $4,631 withheld in 2019. 

 

Return these documents with the green sheet to the address provided. 

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