First of all, you would need to enter your Form 1099C in the program. Here are the steps:
In TurboTax desktop,
- Open your tax file
- To the right upper corner, in the search bar, type in "Form 982" and Enter
- Select "Jump to form 982"
- On screen, Tell Us About Your Canceled Debt, make your selection and choose Continue to proceed.
Then you will need to access Form 982 from the "Forms Mode" to manually enter information. Here are the steps:
- To the right upper corner, select Forms
- From the top, select Open Form, type in 982 and select Open Form
- Manually enter information on the form
In most situations, if you receive a Form 1099-C from a lender after negotiating a debt cancellation with them, you'll have to report to the Internal Revenue Service as taxable income. Certain exceptions do apply. According to the Mortgage Forgiveness Debt Relief Act in 2007, from 2007 to 2020, you can exclude up to $2 million in forgiven mortgage debt if you were married and filing jointly—up to $1 million for other filing statuses. Due to Covid, the CAA extends the exclusion of cancelled qualified mortgage debt from income for tax years 2021 through 2025. For more information, click here: Cancellation of debt
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