Do I report cancelled credit card debt if I didn't receive a 1099-C form?

[engrgeek]

I settled 4 credit card accounts in 2018, but as of today, 3/15/2019, only received one 1099-C form. I am missing three of the four 1099-C forms. The amount forgiven on each account was more than $800. Also, I am insolvent on each account after each cancellation of debt.

Question(s):
1 - Do I report the debt forgiven for the accounts I did not receive a 1099-C form for? I am inclined to do so since the tax deadline is fast approaching. TurboTax allows you to enter multiple 1099-C forms manually, including the worksheets & 982 for each respective account.

2 – Is there harm in reporting the cancelled debt even if the IRS did not receive the 1099-C from the creditor? Won’t this show I am being transparent and erring on the side of caution? If the IRS does receive one of the 1099-Cs, it will show I reported it in a previous year, minimizing additional penalties?

3 - What if I receive the 1099-C in a different year, say 2020, but the “identifiable date” was in 2018? Do I amend my 2018 taxes since that was the year my account(s) were settled and was insolvent when that particular account was settled? (Have documentation showing the date/year accounts were settled if the 1099-C shows otherwise.)

4 – Since I was insolvent, do I need to enter the amount of debt forgiven for State (California) taxes even if it was not included in the IRS 1040? What line on state tax form? Or is there a place for this on TurboTax?

5 - Do I mail in my taxes for both federal and state including the worksheets and supporting documentation for insolvency and help expedite tax process? Or should I e-file and wait for them to request addition information?

Thank you.

[MichaelL1 · Accepted solution]

1)  Yes you can report on the cancelled debt with or without the 1099C's.

2)  It is actually income (cancelled debt) so it should be reported) if you do get a 1099C say in 2019 for debt settled in 2019, IRS may contact you and you would have to show them it was correctly reported in the year it was settled (not the year of the 1099C).  Only provide this if requested however.

3) If you have letter showing it was settled in 2018, then there is no need to Amend the 2018 return.  You would not report in 2020 (or if you did you would show it and then back it out saying it was correctly reported on the 2018 return).

4) I would file CA by mail and attach a copy of Federal return to it. CA starts with the Federal Taxable income.

5) You will get a list of what is needed to be mailed when you submit the returns by mail.  It will not include worksheets or proof of insolvency.  It will include the 982 and lump the total 1099C's (one issued and others not issued) on the one 982.  I would attach a sheet showing how the total amount on the 982 (1099C's) was arrived at.

i would mail Federal and State returns.