filed bankruptcy and canceled debt

I filed BK 2010 and primary home debt forgiven now have mortgage but it is much less
  • Do you have a question related to this information?
  • are debts included in bankruptcy considered a cancelled debt and to be included on taxes?
  • I received 1099-A andmy home was included in bankruptcy.  Do I pay or note this on my taxes
  • sfilbert - If it's for personal property, such as a home or a car, you don't need to report it in your return. Keep this form for your records in case you get a 1099-C that indicates the debt has actually been forgiven.  With the bankruptcy, it should not be taxable if it was discharged.  However, if you do receive the 1099-C, you will still want to report it on your taxes as the IRS also has a copy and will be looking for it.    See the answers below for further details.  If you need more help, let us know.
  • I can't find out where the form 982 is on here so I can show that I filled bankruptcy.
Cancel

The Internal Revenue Code ( see section 108 of the IRC) excludes the discharge in debt achieved under the bankruptcy code from its definition of income.  One of the advantages of bankruptcy is that it provides for the cancellation of debts under the Code will not EVER be construed as income for tax purposes.  So if you file bankruptcy, you do NOT have to report the debts forgiven or pay taxes on them.  This is in contrast to debt settlement, where any relief provided may well be taxable income.

 

For various reasons, some creditors may still send you a 1099C.  If this happens, make sure that the debt was discharged in bankruptcy and not settled before the bankruptcy (which could be taxable).  If it was discharged, file IRS Form 982.  While this form can be complicated, for the consumer with debts discharged in bankruptcy it is simple.  Just check the box “1a” “Discharge of indebtedness in a title 11 case” (“Title 11” is the bankruptcy code) then list the amount on line 2.  If the debt was secured by an asset you kept (such as real estate), ask your tax preparer or attorney about the completion of line 10a, otherwise you are done.  For businesses it is more complicated, but for a consumer it is just that simple.

  • Thank you so much, I wasn't completely sure about this.
  • You're welcome
  • I filed bankruptcy in 2012 and have muti 1099 C from crdeit card debit, How do i fill out from 982 ?
  • cockeye - you have a situation that may be best helped with personalized call or chat to a tax expert. I will provide instructions below.

    To enter your 1099-Cs in Turbo Tax:
    -Federal Taxes tab
    -Wages & Income
    -Explore On My Own
    -scroll down to Less Common Income
    -then, Miscellaneous Income, 1099-A, 1099-C

    Trying to Contact Us or Reach the TurboTax Support Telephone Number?
    This is the "How to" contact Turbo Tax:
    http://turbotax.intuit.com/support/go/GEN12151

    This is the page to input your personal information.  Please click the link below and enter your question.  Then, you will scroll down and be given the option to either Chat or Call in and talk to someone in the correct department to help you out.  
    https://turbotax.intuit.com/support/contact/
  • I filed bankruptcy in 2012 on my credit cards and vehicle. TT has no questions concerning all this. After reading this forum I'm assuming I can just file my return. The only concern I have is that I haven't received any 1099-A or 1099-C but it's only Feb. 3rd and with my luck I would file the return today and the 1099s would show up tomorrow. Spoke to TT over the phone and the lady said I should contact my BK attorney to see if I'm supposed to get any 1099s.
  • If you can't efile form 982 with TT then how do you file it. Do you send it in separate or something.
  • First you say "So if you file bankruptcy, you do NOT have to report the debts forgiven or pay taxes on them."  Then you say "If it was discharged, file IRS Form 982."  Which is it. Report it or don't report it. The answer can't be both.
  • Everybody I know who has filed Chapter 7 bankruptcy says they never reported it or gave any such info to there tax person. Another words they didn't fill out and send in a form 982.
  • jstmars - you only need to if you received forms 1099-C that have to be reported on your tax return. If everything was discharged in the bankruptcy, it is likely you won't receive any...then nothing has to be reported.  If you do receive, them, then you do need to report it on your tax return.
Cancel
Contribute an answer

People come to TurboTax AnswerXchange for help and answers—we want to let them know that we're here to listen and share our knowledge. We do that with the style and format of our responses. Here are five guidelines:

  1. Keep it conversational. When answering questions, write like you speak. Imagine you're explaining something to a trusted friend, using simple, everyday language. Avoid jargon and technical terms when possible. When no other word will do, explain technical terms in plain English.
  2. Be clear and state the answer right up front. Ask yourself what specific information the person really needs and then provide it. Stick to the topic and avoid unnecessary details. Break information down into a numbered or bulleted list and highlight the most important details in bold.
  3. Be concise. Aim for no more than two short sentences in a paragraph, and try to keep paragraphs to two lines. A wall of text can look intimidating and many won't read it, so break it up. It's okay to link to other resources for more details, but avoid giving answers that contain little more than a link.
  4. Be a good listener. When people post very general questions, take a second to try to understand what they're really looking for. Then, provide a response that guides them to the best possible outcome.
  5. Be encouraging and positive. Look for ways to eliminate uncertainty by anticipating people's concerns. Make it apparent that we really like helping them achieve positive outcomes.
Cancel