1099c cancellation of debt

[Antonyfarfan]

My mother-in-law received a 1099c cancellation of debt form. It lists her name only and the total amount of debt ($17,000+) forgiven from an auto loan. The problem is that the auto loan had a cosigner (a relative, not a spouse). The cosigner also received the exact same form in their name only for the total amount of debt ($17,000+) forgiven.  Should they both include the 1099c on their respective individual tax returns? Can they split it? It doesn't make sense for my mother-in-law to pay taxes on $17,000+ and the cosigner to also pay taxes on $17,000+ simultaneously when only one debt of $17,000+ was forgiven... 

[KurtL1 · Accepted solution]

Per Publication 4681 - Canceled Debts, Foreclosures, Repossessions, and Abandonments, if you and another person were jointly and severally liable for a canceled debt, each of you may get a Form 1099-C showing the entire amount of the canceled debt. However, you may not have to report that entire amount as income.

The amount, if any, you must report depends on all the facts and circumstances, including:

• State law;
• The amount of debt proceeds each person received;
• How much of any interest deduction from the debt was claimed by each person;
• How much of the basis of any co-owned property bought with the debt proceeds was allocated to each co-owner; and
• Whether the canceled debt qualifies for any of the exceptions or exclusions described in this publication.

The debt was for a car loan. The individual that had possession of the car would be the individual that would claim the full amount of the debt cancellation.

The other individual, that received the Form 1099-C, will need to mail in their return and attach a statement stating the they are not responsible for any part the joint debt on the Form 1099-C. They should list the name and social security number of the other individual and state that that person is including the entire amount of the debt on their return.

[JW47]

I received a 1099C for a truck loan my ex husband and I had before our divorce in 2015.  In the divorce he kept the truck and I kept our other vehicle. He still has possession of the truck. Does he file the whole cancellation amount, and I file none, since he is still in possession and I have no benefit or income with the truck?

[JeffreyR77]

As @kalehnhardt2 posted Jan 28 2020, if you both received a 1099-C and were both jointly and severally liable for the debt, you can take this approach:: 

Per Publication 4681 - Canceled Debts, Foreclosures, Repossessions, and Abandonments, if you and your ex were jointly and severally liable for a canceled debt, each of you may get a Form 1099-C showing the entire amount of the canceled debt. However, you may not have to report that entire amount as income.

The amount, if any, you must report depends on all the facts and circumstances, including:

• State law;
• The amount of debt proceeds each person received;
• How much of any interest deduction from the debt was claimed by each person;
• How much of the basis of any co-owned property bought with the debt proceeds was allocated to each co-owner; and
• Whether the canceled debt qualifies for any of the exceptions or exclusions described in this publication.

The debt was for a truck loan. The individual that had possession of the truck would be the individual that would claim the full amount of the debt cancellation.

You will need to mail in your return and attach a statement stating that you are not responsible for any part the joint debt on the Form 1099-C. You should list the name and social security number of your ex and state that that person is including the entire amount of the debt on their return.

[TONYROTAXES]

I included 1099 c as income but i do not see it in other income

[WendyN2]

If you've entered the 1099-C properly, you should see it on your Schedule 1 of your 1040. That forms' total net figure then gets reported on page 1, line 8, of your 1040. 

The correct location to enter your 1099-C information can be found by following this path:

Personal > Personal Income > Less Common Income > last line item Miscellaneous Income, 1099-A, 1099-C

[tamimylove46]

submitted my returns for 23018 and 2019 late

irs returned 2019 with green form #3531, said the return was   not signed, also shows circled  "total income" 7 b shows -$12,477, . Then attach supporting documents for your entry of $4,631 for federal income tax withheld. This may be a form w2, form w2g, form1099 or substitute form w 2  for example a copy of an earning statement with year end totals

So not  sure whats this means, as I followed the fill in process with forms I had in my possession. It also says not to sign green form but assuming 

but how do I get on live????

8Aadjustments of

[JeffreyR77]

The IRS is looking for you to provide them a signed copy of your 2019 tax return along with the documents you used that have the withholding that shows you had $4,631 withheld in 2019. 

Return these documents with the green sheet to the address provided. 

[Curious One]

My father received a 1099-C for tax year 2022.  It states that the date of the identifiable event was 12/28/22 pursuant to Code G.  However, my father passed in March 2020.  My parents used to file MFJ, but since 2021 my mother has been filing single.  Is there any reason why she needs to include this information in her 2022 tax return?

[ErnieS0]

It depends on whether she was liable for any portion of the debt.

If your mother was liable, include Form 1099-C on her return.

If she was not liable, follow Tax Expert DianeW777’s instructions in “1099C for deceased. Final return filed. No money in estate. What do I do?”

@Curious One

[Curious One]

Seems this is not such an unusual issue.  I can't be certain about my mother's liability for the obligation, but as she did not receive a 1099-C herself, when it appears other co-obligors have done so, I'm inclined to believe that she has no liability.  She may have been an additional card holder, but I don't think the application relied on her credit.  If true, would that give her secondary liability for his obligations?  Again, I would think not, but would appreciate your views.  Finally, is there a threshold below which the IRS likely not to pursue an action for the tax due on a forgiven indebtedness?  It feels like the filing requirements are somewhat overdone for modest amounts, but if required due they adhere to the same filing deadlines as individual tax returns?  If not, when must they be filed?  If so, can an extension be obtained even though a 1040 is not in issue?

[ThomasM125]

For practical purposes, the IRS will likely not link the debt cancellation to your mother since her social security number is not listed on the form 1099-C. The debt cancellation becomes effective the year it is cancelled, so technically she has no tax obligation for it in 2022 since she is filing single for that year, so it will not be linked to her return by social security number. 

The income would be taxable on the 2022 return, so the tax on it would be due Aprl 18, 2023. An extension could be done to delay the time to file a return for 2022, but the tax due date would not be extended. All amounts of income are taxable unless exempted by tax law, it is not possible to determine with certainty what level of income the IRS would scrutinize.

@Curious One curious One