Cancellation of debt 1099c

[greg-emerson]

received a 2016 1099c for $6500 but settled the account with a 3rd party collection agency for $5200 in January 2017?? How do I file this and give credit for the $5200 settlement payment?

[JaimeG]

Your first step would be to contact the creditor, and request that they provide you with a corrected 1099-C. Considering that we are just a bit less than a month away from the deadline to file your Taxes, I recommend that you file an Extension to file your Taxes, Form 4868.

If the creditor refuses to send your a correct 1099C in order for you to file your return by October 16, 2017 (if you requested an extension) you must file your return by mail and include Form 8275. Form 8275 is used to disclose a position that is not adequately described with your Tax Return alone. In this case you are going to substantiate with form 8275 that you have settled the debt and the amount of 1099C is incorrect. You must also attach any and all documentation related to this debt settlement. By filing your return with this form you will be able to avoid immediate penalties for understating any income.

Attached below are Form 8275 and the Instructions.