Received a 1099C for cancellation of debt of a credit card...want to file insolvency (Form 982)...Does turbo tax handle this???

Under these circumstances and in order to file the Form 982, we generally recommend using the CD/Download version of TurboTax Deluxe or a higher edition. I notice that you are currently using our TurboTax online product.

Form 982 (Reduction of Tax Attributes Due to Discharge of Indebtedness) reports the amount of cancelled debt to excluded from taxable income. We'll automatically generate Form 982 if your cancelled debt is due to:

• Cancellation of qualified principal residence indebtedness, aka mortgage debt relief;
• Debt cancelled in a Title 11 bankruptcy;
• Debt cancelled during insolvency (the amount exceeding your assets);
• Cancellation of qualified farm or real property indebtedness.

In addition, you should have a 1099-C to report the amount of cancelled debt.

In order to the switch from online to CD/download. please see the following link: https://ttlc.intuit.com/questions/1901476-how-do-i-switch-from-turbotax-online-to-the-turbotax-softw...

Once you have done the above you can access the forms mode of your desktop program using these steps:

To switch to Forms Mode, open your return, and then click the Forms icon in the upper right corner of your screen (or choose Forms from the View menu at top).

The Federal Information Worksheet will display and all the forms in your return will be listed on the left side. Then click on Open Form and type in the search box: Form 982.

To make sure its excluded within your return, you will need to fill out the following forms:

• Form 1099-C (Cancellation of Debt), fill out accordingly

• Form 982, you will need to indicate the reason for the discharge within Part 1 General information and you will need to include an amount within Part II Reduction of Tax Attributes (accordingly to the reason)

• Canceled Debt Worksheet (fill out the Part accordingly to your reason or exclusion)
• Part III Gain or Loss from Foreclosure, Repossession, Abandonment, Short Sale
• Part VI Exclusion for Bankruptcy
• Part VII Exclusion for Qualified Principal Residence Debt
• Part VIII Exclusion for Insolvency (must fill out the Statement of Insolvency)
• Part XI Exclusion for Qualified Farm Debt
• Part X Exclusion for Qualified Real Property Business Debt
• Part XI Exclusion of Gain of Principal Residence (Section 121)

• Then check Form 1040, look at Line 21 Other Income, should be 0.

I have had debts cancelled, and yet Turbo Tax just says I have to pay taxes, and I have not had opportunity to file insolvency, or Form 982.  Won't even come up.  What to do - I am 78 years old, with a small business doing medical transcription, which is failing, and my income has dropped.  Over the last few years, I supported two grandchildren, who I could not take as dependents -  and I need help - what to do 

 

Thanks - Dottie

I'm sorry for your dilemma.

 

You can file the form 982 in the desktop version of TurboTax. That may allow you to have your cancelled debt treated as not taxable.

 

To find the form 982 in TurboTax, you need to go to the "Forms" mode (you'll see an icon for that on the menu bar), then search for the form by typing in "982" in the forms search box. Once you have the form 982 up on your screen, you will see an option for a "Cancellation of Debt" worksheet that you need to complete.