If you received Form 1099-C Cancellation of Debt and are eligible to exclude a canceled debt from your income because of any of the following, file Form 982 Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) with your return. Note. If you didn't receive a Form 1099-C from the lender, you probably don't have canceled debt income and shouldn't need to file Form 982):
The cancellation is intended as a gift
- The debt is qualified farm debt (see chapter 3 of Publication 225 Farmer's Tax Guide)
- The debt is qualified real property business debt (see chapter 5 of Publication 334 Tax Guide for Small Business)
- You are insolvent or bankrupt (see Publication 908 Bankruptcy Tax Guide)
- The debt is qualified principal residence indebtedness (see page 4 of the IRS Instructions for Form 982)
To enter Form 1099-C information in your TaxAct® return:
- From within your TaxAct return (Online or Desktop) click Federal. On smaller devices, click in the upper left-hand corner, then select Federal
- Click Other Income in the Federal Quick Q&A Topics menu to expand the category, then click Cancellation of Debt (Form 1099-C)
- The program will proceed and will request you to Add Form 1099-C, and offer additional guidance on Form 1099-A and with Continue there are interview questions for you to enter or to review the appropriate information
If you qualify for this exclusion, you would use Form 982 to report the exclusion of the canceled debt. Form 982 will follow the 1099-C interview.
See IRS Publication 4681 Canceled Debts, Foreclosures, Repossessions, and Abandonments for more information.