We received a 1099c and this debt was canceled due to a Bankruptcy. Is this still considered income? or is there another form that I need to fill out so this doesn't show up as income
Yes. You need to include this on your return.
If your debt was discharged in a Title 11 bankruptcy proceeding, such as a Chapter 7 or Chapter 13 case, you're not responsible for taxes on that debt.
However, if the debt, or part of it, was canceled before you filed bankruptcy (through debt settlement or negotiation, for example), the creditor must issue the 1099-C and that debt is not excluded, because it was not discharged in bankruptcy. As a result, even if you later file bankruptcy, you may owe tax on that debt cancellation income unless you were insolvent at the time you settled it.
To claim the exclusion due to bankruptcy, you'll need to use either the download version or the CD version of TurboTax. With either of these versions, you'll be able to access Form 982 to easily make a notation regarding your bankruptcy.
If you started your 2016 return in TurboTax Online and want to switch to the TurboTax download/cd version, click here.
Note: if already paid for TurboTax online,
contact our support representative
; otherwise proceed with the desktop purchase.
Once you have the Download/CD version, there are two steps to claim your exclusion.
1. Enter Form 1099-C:
Yes. You need to include this on your return.
If your debt was discharged in a Title 11 bankruptcy proceeding, such as a Chapter 7 or Chapter 13 case, you're not responsible for taxes on that debt.
However, if the debt, or part of it, was canceled before you filed bankruptcy (through debt settlement or negotiation, for example), the creditor must issue the 1099-C and that debt is not excluded, because it was not discharged in bankruptcy. As a result, even if you later file bankruptcy, you may owe tax on that debt cancellation income unless you were insolvent at the time you settled it.
To claim the exclusion due to bankruptcy, you'll need to use either the download version or the CD version of TurboTax. With either of these versions, you'll be able to access Form 982 to easily make a notation regarding your bankruptcy.
If you started your 2016 return in TurboTax Online and want to switch to the TurboTax download/cd version, click here.
Note: if already paid for TurboTax online,
contact our support representative
; otherwise proceed with the desktop purchase.
Once you have the Download/CD version, there are two steps to claim your exclusion.
1. Enter Form 1099-C:
This situation is handled best by contacting customer care. Please click here for directions.