Do both borrower & cosigner file 1099-C?

Forum|Forum|5 years ago
February 5, 2021
1 reply
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Do both the borrower & cosigner have to file a form 1099-C on their federal income taxes for canceled private student loan debt sent to collections due to cosigner's Chapter 13 bankruptcy? The cosigner never made a payment throughout life of loan, even before it was sent to collections. Only borrower made payments.

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Best answer by AmyC

The borrower is the debtor and includes the income. The cosignor was the guarantor and not required to claim the 1099-C income. See Legal information.

If you incorrectly receive the 1099-C, contact the issuer and ask for a corrected form to be issued, excluding you. If the issuer will not, you will need to add a statement to your return explaining why you have chosen to not include the 1099-C on your return. You will have to mail in your return. You will not be able to e-file with a statement.

AmyCAnswer

Level 15

The borrower is the debtor and includes the income. The cosignor was the guarantor and not required to claim the 1099-C income. See Legal information.

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jjschwie2

Level 2

Is there a specific form/statement that needs to filled out. Form 982?

BrittanyS

Level 12

This has happened to me this year. I am the co-signer for my daughter's loan and we both received a 1099-C for the amount. I called Sallie Mae and explained the situation and they told me to contact a tax expert.

I have read a couple of different answers to this situation.

So - Should I file my taxes without claiming the 1099-C -or- not claim it and include a letter stating why it wasn't reported on my taxes?

Yes, you can file your return without claiming the 1099-C, with a statement as to why it was not claimed.

Per the IRS instructions, "You are not required to file Form 1099-C for a guarantor or surety. A guarantor is not a debtor for purposes of filing Form 1099-C even if demand for payment is made to the guarantor."

Since you have reached out to the issuer and they stated to ask a tax expert you can refer back to them and state that you were advised a corrected 1099-C should be issued by them. However, as AmyC stated, if the issuer will not correct the 1099-C, you will need to write a statement explaining you are the guarantor which is why you are not filing the 1099-C on your return. You will need to mail the return along with the statement to the IRS.

@rodriguezkimberley

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