turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
Announcements
Close icon
Do you have a TurboTax Online account?

We'll help you get started or pick up where you left off.

I received a 1099-C for cancellation of debt 4 years ago and just got another 1099-C from the debt collector. I shouldn't pay on this twice. What do I do?

The original mortgagor reported it and now years later debt collections is reporting it as taxable income as well.
Connect with an expert
x
Do you have an Intuit account?

Do you have an Intuit account?

You'll need to sign in or create an account to connect with an expert.

1 Reply
JamesG1
Expert Alumni

I received a 1099-C for cancellation of debt 4 years ago and just got another 1099-C from the debt collector. I shouldn't pay on this twice. What do I do?

Was the previous IRS form 1099-C income taxable?  In some cases and in some tax years, canceled debt from your home mortgage was excluded from taxable income.

 

The topic is quite complex.  See this TurboTax Help here.

 

However,

 

  • If the IRS form 1099-C does report taxable income, 
  • If the income is reported on Schedule 1 Additional Income and Adjustments to income line 8c, and 
  • That taxable income has been reported in a previous tax year, 

You may elect to back out the income.

 

IRS form 1099-C income may need to be reversed if some or all the income reported on the 1099-C is not accurate.  Post the negative entry as follows:

 

  • Down the left side of the screen, click Federal.
  • Down the left side of the screen, click Wages & Income.
  • Scroll down to Less Common Income and click on the dropdown menu.
  • To the right of Miscellaneous Income, 1099-A, 1099-C, click the Start / Revisit button.
  • To the right of Other reportable income, click the Start / Revisit button.
  • At the screen Any Other Taxable Income, click Yes.
  • At the screen Other Taxable Income, enter a description such as “IRS form1099-C reported twice” and a negative amount.
  • Click Continue

The entry will be reported:

 

  • on line 8z of Schedule 1 of the Federal 1040 tax return, and 
  • on line 8 of the Federal 1040 tax return.

 

Make sure that you keep records of all transactions. Later, you may need to demonstrate to the IRS that this is not taxable income.

 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
message box icon

Get more help

Ask questions and learn more about your taxes and finances.

Post your Question
Manage cookies