Cancellation of Debt

[cfshultz]

how is this reported on an individual tax return

[MaryK4]

Cancellation of debt is added as income unless one of the exception or exclusion applies apply.  The most used exclusions include insolvency, business real property and qualified principal residence indebtedness.  (See Topic No. 431 Canceled Debt – Is It Taxable or Not? )

If you must include it, follow these instructions: How do I enter a 1099-C? 

[Mike9241]

Bankruptcy shouldn't affect your tax return, even though cancelation of debt is normally considered taxable income. That's because debts discharged in bankruptcy are specifically excluded from income under the tax rules.

Personal bankruptcy expenses, such as legal fees, are not deductible. However, expenses for a business bankruptcy can be deducted as a business expense.

if you did not file for bankruptcy you may be able to use form 982 to reduce certain tax attributes and thus reduce the taxable amount of debt forgiven. if the debt forgiven is significant you may want to seek the aid of a tax pro to go over what can be used on the 982. 

https://www.irs.gov/pub/irs-pdf/f982.pdf 

[memory]

1099-C Cancelation of debt under $3000, for a dependent, where I am filing as head of household.  How do I enter this or do I need to enter anything as the dependent made less than $4400.

[PattiF]

You do not need to file this with your return. 

Your dependent would include this on their return if they were required to file a return.  Your dependent is not required to file a return based on their income.

Please see this TurboTax Help article for the tax requirements for dependent children.