Co-signer of private student loan recieve 1099-C

The co-signer is not responsible and should not receive a 1099-C.  See this answer for more.

https://ttlc.intuit.com/community/taxes/discussion/do-both-borrower-cosigner-file-1099-c/00/1877982

You should contact the lender and ask them to cancel the 1099-C.  If they refuse, you should list it as income on your tax return and then create an item of "other miscellaneous income" in a negative amount (minus sign) to offset the income, for the reason, say something like "1099-C not taxable to co-signer".

I can't answer whether the 1099-C is taxable to the student borrower.  The rules on that have changed a lot and it depends on why the loan was canceled and who made the loan. Private loans may have different rules than government loans. 

thank you for your response. I contacted the lender and they will not withdraw the 1099-C that I am a co-signer on the loan. They are 1099-C debtor and co-signer. Is there a seperate form to fill out to accompany my taxes to state the 1099-C tax is to be reversed and why? I spoke to a local tax preparer and he is stating there must be a proper form and not just a letter.

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@RS8868 wrote:

thank you for your response. I contacted the lender and they will not withdraw the 1099-C that I am a co-signer on the loan. They are 1099-C debtor and co-signer. Is there a seperate form to fill out to accompany my taxes to state the 1099-C tax is to be reversed and why? I spoke to a local tax preparer and he is stating there must be a proper form and not just a letter.

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If you file by mail, the IRS instructions say to leave the 1099 off your return, and attach a copy with a written explanation as to why you did not include it.

When e-filing, the correct procedure is to list the income (canceled debt, it will go on line 8c of schedule 1) and then add a negative adjustment to line 24z with a brief written reason (something like "1099-C not taxable to co-signer").  However, to make the entry on line 24z, you need to access the form directly in the desktop version of Turbotax installed on your own computer from a download.

When e-filing using Turbotax online, you can't access line 24z, so an acceptable alternative procedure is to list the income as canceled debt, then add a negative item of "other taxable income" to offset it.  Use the same brief written reason.  This will put the negative adjustment on line 8z of Schedule 1 instead of line 24z, but it's what Turbotax recommends when using Turbotax online.  

I really appreciate your help!!

Thank You

Did you daughter end up receiving a 1099-C as well --  or just you as co-signer?

If you are in the same situation, even if the daughter did not receive a 1099-C, the co-signer is not responsible for the 1099-C.  Opus17 provided great steps above for how to handle this situation on your tax return.  I have copied his response to this thread for easy review, "If you file by mail, the IRS instructions say to leave the 1099 off your return, and attach a copy with a written explanation as to why you did not include it.

When e-filing, the correct procedure is to list the income (canceled debt, it will go on line 8c of schedule 1) and then add a negative adjustment to line 24z with a brief written reason (something like "1099-C not taxable to co-signer").  However, to make the entry on line 24z, you need to access the form directly in the desktop version of TurboTax installed on your own computer from a download.

When e-filing using TurboTax online, you can't access line 24z, so an acceptable alternative procedure is to list the income as canceled debt, then add a negative item of "other taxable income" to offset it.  Use the same brief written reason.  This will put the negative adjustment on line 8z of Schedule 1 instead of line 24z, but it's what TurboTax recommends when using TurboTax online."

@Parsons703 

i contacted the lender and they send the 1099c to both parties so yes she recieved one as well

If you received an erroneous 1099, you have several choices:

1. Ideally, you get a corrected 1099 from the payer
2. Don't report it on your return. Attach a copy of the 1099 and a statement explaining the circumstances. You can't e-file. From the old IRS instructions for form 1099-Misc: Form 1099-MISC incorrect? If this form is incorrect or has been issued in error, contact the payer. If you cannot get this form corrected, attach an explanation to your tax return and report your income correctly.
3. Report the income as misc line 8z, Schedule 1 income  (enter in TurboTax at the 1099-C screen ) Then enter a line 8z deduction, for the same amount.  In TurboTax (TT), enter at:
   - Federal Taxes tab
    - Wages & Income
   Scroll down to:
   -Less Common Income
         -Misc Income, 1099-A, 1099-C
          - On the next screen, choose – Other reportable income -  Answer yes to Any other Taxable Income -On the next screen, Enter the number with a minus sign (-) in front.  Briefly explain at description. Call it something like "erroneous 1099-C received"
4. Do nothing and hope you can explain it away when & if the IRS contacts you