Although the IRS generally considers cancelled, forgiven, or discharged debt as taxable income, there are exclusions and exceptions to the rule. More info
When you
enter your 1099-C in TurboTax
, we'll ask a series of questions to determine if some of all of your 1099-C debt can be excluded.
https://ttlc.intuit.com/replies/5107826
Form 982 (Reduction of Tax Attributes Due to Discharge of Indebtedness) reports the amount of cancelled debt to excluded from taxable income.
TurboTax will automatically generate Form 982 if your cancelled debt is for a qualified principal residence indebtedness, aka
mortgage debt relief
.
Search for 982 in your TurboTax program and then click the "Jump to" link to access the cancellation of debt section. You should have a 1099-C to report the amount of cancelled debt. (You'll need to use TurboTax Deluxe or higher to file Form 982.)
If your canceled debt isn’t directly related to the purchase of a main home, the IRS has strict guidelines for determining how to report it. There are several options specific to each taxpayer’s situation. To determine which apply to you, we recommend you consult a tax professional or see IRS Publication 4681 or Publication 544.
