Yes, if you qualify. First, you have to determine up to what point you were insolvent. The worksheet can be found on page six of the following document: https://www.irs.gov/pub/irs-pdf/p4681.pdf (It is a PDF file). This worksheet is manual, and usually requires some investigation. Look at the discharge date on the 1099C and the amount of debt that was cancelled. The worksheet is based on the amount of attributes and debts you had on that date. You will need to see what your bank account, credit card debts, car debt, house debt, etc. were on that date (unpaid medical expenses, etc.) If your llabilities are greater than your assets, (do not include the debt amount canceled), you are insolvent. That is the number you will put in the 982 form under insolvency and goes with your return. If your insolvency is greater than your canceled debt, you have no canceled debt will not be taxable. I recommend mailing in the return to include both form 982 and the worksheet.
If your canceled debt is more that your insolvency, that is claimed as other income (line 21). In TurboTax you will see this as Miscellaneous Income.
do you file the worksheet with your return? It says keep for your records on it but some accountants say you have to file it.
It depends. You may keep it for your records but it is likely that the IRS will ask for it. I had a couple who I helped declare totally insolvent and the IRS asked for the form. If you wish to include the form with the return I suggest mailing it in, because it probably won't get sent out electronically.
Thank you. I just feel weary submitting info to them they did not ask for and make myself more vulnerable in terms of them questioning every number. Of course I can back it up with statements but if they do not ask for it, I dont know why some accountants insist on still just supplying them with info they did not ask for thereby just giving them ideas.
I understand. If you wish to send just the worksheet, this is acceptable. If you wish to e-file and take your chances that they don't ask, this too is acceptable, but have documentation ready if they do ask. For the clients I assisted, they only wanted to see the worksheet and didn't need the other proofs, which we did have.
HELP! Turbo Tax won't bring up the 982 for me to fill out so it's saying that I owe $3000. I received several 1099C's for cancellation of my Credit Card Debt. What do I do now? My amount of insolvency is $14.600 but I can't enter that amount because they aren't giving me the 982 Form to fill out. Does this mean I have to fill out a paper copy and file it by mail? I haven't done that for over 10 years and wouldn't know where to begin.
You can pull up the form by: 1) Logging in to your account. Click on "Take me to my Return" and "Pick-Up Where I Left Off". 2) Click on the "search" box, which is the magnifying glass up on the top right of your screen. 3) Type the number 982 {enter}, and then the link "Jump to 982". This will pull up the form for you.
I manually filled out the worksheet to prove insolvency but online/cd version will not bring up form 982. I searched for 982 and jumped to link but no luck
Try the instructions in this link by NicoleU (click on link): <a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/3473409-how-to-file-form-982">https://ttlc.intuit.com/questions/3473409-how-to-file-form-982</a>
If you use the downloaded version, switch to forms view (upper right), select open form and it will appear. Also you will include the statement of insolvency and the amount calculated for the date the debt was discharged. Turbotax does not coach you through this automatically but I phoned and an escalated tax professional was able to find what I needed after the hot steamy read of Pub 4681!
1) Is the Statement of Insolvency the same as the "insolvency worksheet" or are they two distinct forms? I only see an option for Statement of Insolvency.
2) If yes to #1: Are the liabilities/Assets supposed to be their value on day before the Event/Cancel Date?
3) Do I include the (total amount) of the debt that was canceled in liabilities if the debt was defaulted/charged off/being pursed by a collection agency? e.g. 1000 was owed, then got defaulted and sent to Collections, who then paid settled for less than the total amount. Would you include the 1000 as a liability?
3) I completed Part I but am unsure how to complete Part II especially since my liabilities still exceeded my assets the day after cancellation. If that is the case, how do I explain that (as they say the number cannot be zero)?
3b) They say you can put the amount you wish to exclude (line 2) in line 10a of Part II, but what does that actually mean/affect your refund?
Any help would be appreciated
I have a 1099C for one credit card in the amount of $894. I am unemployed with many unpaid bills for ambulance companies that I cannot pay due to my present situation. Does it mean that I am insolvent and should use form 982.
Regards,
J youmans
Yes, being unemployed and having unpaid bills is definitely a sign of insolvency. Basically, if you were "insolvent" prior to getting the debt relief that generated the form 1099-C, then the debt would be excluded from income using the form 982.
Here is a link to the IRS discussion of "insolvency". You can also link to the instructions for form 982 from there, and scroll down to the instructions for line 1b.
Does filing a 982 for insolvency on canceled student loan debt have any effects on your credit or credit report?
No, filing the form itself doesn't affect your credit score. However, If you’ve received a 1099-C, the damage to your credit has most likely already been done.
so im confused. if i was insolvent which is what caused the debt that is now beyond statue of limitations (almost 20 yrs) but im not insolvent now and now 20 yrs later is when they decide to discharge the debt does insolvency not apply? i still have to even verify the debt because im not certain its even true.