HOW do I fill out form 982?? Specifically, do I put anything in part II?

099c , form 985, I have a question on part II?
what , if anything do I put on form 982, Part 2?
I checked line 1B Discharge of indebtedness to the extent insolvent and
the amount of my discharged indebtedness excluded from income is $3855.00
We have not filed chapter 11 , or any other type of bankruptcy.


Thank you ahead of time, whoever answers this question
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    I finally  have the answer!!!  I found it in another post, so thanks to this person for the help!  I am reposting it here for anyone else who needs it:



    For tax for 982--Reduction of Tax Attributes Sue to Discharge of Indetedness http://www.irs.gov/pub/irs-pdf/f982.pdf

    If the 1099-c received was for credit card debt, then you need to check the box 1 b

    If you received one or multiple 1099-c forms then you add up the totals of all forms you received and place that total on line 2.

    Line 10a is for credit card debt settlement. You must put the same amount you placed on line 2 on line 10a. Then must match as you will earn yourself an instant audit, which none of us want.


    You need to fill out an insolvency worksheet. http://taxtipsfrombill.com/Documents/Cancellation%20of%20Debt%20Insolvency%20Worksheet.pdf

    If filiing by mail, this worksheet MUST be included with the 982 regardless of if you have to pay taxes on the settlement or not.


    NOW HERE IS THE TRICKY PART

    Step 1---If after finishing this worksheet you must subtract your assets from your liabilities. ( $40,000 assets - $100,000 liability= ) If your liabilities are great than your assets( -$60,000) you then put that total aside until step 3.

    Step 2---You should put the total of all your 1099-c's($7,000 wachovia + $1,000 chase= $8,000 total taxable 1099-c) on line 2.

    Step 3---Next you substract the line 2 1099-c total from your liabilities. (-$60,000-+ 8,000= $52,000 more liability to 1099-c taxable settlement)

    In other words, if you 1099-c total is greater than the total of liability over of your assets you must pay on that total overage. ( 1099-c total taxable income $8000. Assets $40,000, Liabilities $12,000= +$38,000--you must pay taxes on all of the taxable 1099 amount) If it is less than your liability total then you do not pay taxes on the 1099 settlement amount. 1099-c total $10,000, Liabilities $50,000-Assets $10,000= --$40,000 which is more than the 1099c of 10,000) If the 1099c is only partially the amount then you are responsible for the difference, In other words ( 20,000 1099c total, Liabilities $30,000-Assets $15,000=--$15,000 which is less than the 1099c so you must take the 1099 total of $20,000 and substract the $15,000 from it=giving you the total taxable income to report on line 21 of your tax form or $5,000 in this example.)

    $40,000 assets
    -$12,000 liabilities
    ________________
    $38,000 ---you pay taxes on ALL your 1099c total so if it is $4,400, you put $4,400 on line 21.

    $10,000 Assets
    -$50,000 Liabilities
    ___________________
    -$40,000 ---You pay taxes on any amount over $40,000 so if you 1099 is under $40,000 you do not pay taxes, if it is over, you pay on what is over that total So, if it is $32,000 on your 1099c--since it is less than $40,000 you do not report anything extra on line 21


    -$15,000 Assets
    $30,000 Liabilities
    __________________
    -$15,000--- Your 1099c is $20,000

    $20,000 1099c
    $15,000 liability overage
    ________________________-
    $5,000 reported on line 21 as extra income.


    Step 4---Basically, if your total of 1099-c is larger than your liability total you must subtract the liability total from the 1099-c total and add that amount as income on line 21.

    If your liability after assets is larger than your 1099 total then nothing is added to line 21.


    ******************You can use Turbo tax to file electronically, but the forms are only available on the Home and Business edition. You must go the forms portion of the taxes and click add forms and add the 982. Fill it out there and then click and add for insolvency of debt. Fill it out with your asset to liability ratios and then you can electronically file.
    • where do i find the "line 21" that is referred to?
    • Thanks so much!!! Browsing the web for an answer to the mutilple 1099-C thing and this is exaclty what I needed :)
    • This is kind of helpful, but it still isn't really clear on what to do in Part II, which is my big question as well.  My cancelled debt is from a foreclosure, not credit cards, and I was insolvent enough to cover the whole amount forgiven.  So - what do I put in Part II?  I don't get the whole "reduction of tax attributes" thing.
    • For credit card debt, do we need to fill out anything in Part III of form 982?
    • Do you need to place anything in line 10a if the 1099c is due to cancellation of Student Loans?
    • I was also told the insolvency worksheet is for personal records and doesn't need to be sent to the IRS, only the form 982.  Is this true?
    • I was told not to include worksheet, but to keep in case of an audit. Only fill out form 982 and do not include cancellation of debt amount on line 21.
    • What about line 10a, should that be the exact amount entered in line 2?  Example..

      Insolvency amount based on worksheet is $70k
      Cancelled Debt for Student loans is $50K
      on form982
      Check box 1b
      Enter $50K in line 2
      Enter $50k on line 10a under PartII

      Does that sound correct?
    • If we have a 982 to file with our return, can we still efile with TT? Or do we have to file by mail?
    • same here. keep the worksheet in your papers. don't turn it in.
    • Paragraph 5 --" Line 10a is for credit card debt settlement. You must put the same amount you placed on line 2 on line 10a. Then must match as you will earn yourself an instant audit, which none of us want."
    • ******************You can use Turbo tax to file electronically, but the forms are only available on the Home and Business edition. You must go the forms portion of the taxes and click add forms and add the 982. Fill it out there and then click and add for insolvency of debt. Fill it out with your asset to liability ratios and then you can electronically file.
    • Thank you so much for your help with this I really appreciate you taking the time and I understand it totally now.....you are awesome!
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    I filed form 982 for 2012 taxes for a credit card debt(even though it was 7 years old & seems to me the junk buyer should have done something 3-4 years sooner, from the way I take the IRS rules, but anyway.....) I did NOT fill in line 10a (nor anything in section 3) and I did do a live chat with a tax pro prior to submitting. At first he said I did need to fill in 10a, but then researched a little and said I did not need to fill in 10a. Got my refund within the normal time frame. I used TT deluxe(CD package) and had to find & add 982 form into my return. I also electronically filed using that CD. When using the CD software you can select what forms you want sent to IRS(for the electronic filing). I did NOT send in the insolvency worksheet, as I had been told by my accountant days before that I did not need to. However, I did print a copy(for my records) of every form the software takes you through, including all worksheets, etc.

    • can anyone post a sample of form 982 here
    • I am filling out a form due to a credit card 1099c in the amount of 4553.68 and the amount of insolvency is -15780.31
    • I recently asked a tax professional who told me that the solvency worksheet didn't need to be included, I just wanted to illustrate to the IRS how I came up with figures.  I just assumed it wouldn't hurt to add one additional sheet.  The IRS could ask for it in the future or they may simply accept the form 982 is my understanding.
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