TurboTax does not have an interview for form 982, which is where you report your insolvency exception. To get to form 982, you need to have the desktop software (which you already do), then you need to go into Forms mode. Once in Form mode, click on the icon "Open Form" (upper left), then search for 982, and when that form comes up, highlight it, and then click on the "Open Form" button at the bottom. This will open form 982; however, you will need to complete it yourself. This is why TurboTax advises you in this situation to seek the help of a local tax pro.

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steven6

Solved

I need to know about the insolvency exception for 1099-c. Do I qualify? How do I claim insolvency?

Forum|Forum|6 years ago
June 7, 2019
4 replies
0 views

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TurboTax Deluxe Online

Best answer by MargaretL

To qualify for the insolvency, you must show that all of your liabilities (debts) were more than the Fair Market Value of all of your assets immediately before the cancellation of debt.

To show that you are insolvent and are excluding your canceled debt from income, you must fill out Form 982. Although the form is available in Turbo Tax, it is not available on line. You would have to use a cd/download and fill out the form manually, there is no interview questions for this.

I recommend that you first read the following links and fill out the insolvency worksheet and the form from the IRS website. Once you have completed it, purchase the cd/download to enter the forms' information into the software.

Please refer to page 5 for insolvency explanation and page 8 for insolvency worksheet:
https://www.irs.gov/pub/irs-pdf/p4681.pdf

Form 982 and its instructions:

https://www.irs.gov/pub/irs-pdf/f982.pdf

MargaretLAnswer

Employee

To qualify for the insolvency, you must show that all of your liabilities (debts) were more than the Fair Market Value of all of your assets immediately before the cancellation of debt.

Please refer to page 5 for insolvency explanation and page 8 for insolvency worksheet:
https://www.irs.gov/pub/irs-pdf/p4681.pdf

Form 982 and its instructions:

https://www.irs.gov/pub/irs-pdf/f982.pdf

TBorch

I received a 1099C and am about to fill out form 982 (insolvency worksheet). I have already purchased the Turbo Tax cd. After I get this filled out, where am I able to enter this info. in Turbo Tax? Would someone please help me with this? I have to file my taxes for 2017 by Jan 15, 2020!

Terri

BillM223

TurboTax does not have an interview for form 982, which is where you report your insolvency exception.

To get to form 982,

you need to have the desktop software (which you already do),
then you need to go into Forms mode.

Once in Form mode,

click on the icon "Open Form" (upper left),
then search for 982,
and when that form comes up, highlight it, and then click on the "Open Form" button at the bottom.

This will open form 982; however, you will need to complete it yourself. This is why TurboTax advises you in this situation to seek the help of a local tax pro.

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KB231

Regarding the insolvency exclusion... it states that you calculate your liabilities and assets immediately before the cancellation of debt. So I would awesome the debt that has been cancelled would be included in the liabilities. Is this correct? I'm hoping so! Also, do you know if the same applies for Massachusetts state tax?

ThomasM125

Yes, the debt cancelled would be included in the liabilities to determine your insolvency.

When you prepare the Massachusetts return in TurboTax, the federal income will be used as your Massachusetts income starting point. So, you will start out with the debt forgiven.

I suggest you work through the program and see if there is any mention of adjusting the federal income for the debt forgiven. In other words, follow the instructions in the state program and you should come up with the correct result.

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Raymond316

I need to file two 1099-C forms from two different creditors

DianeW777

It depends. You must use the Insolvency Worksheet to see if you qualify, it is included in the publication link below.

See IRS Publication 4681 for more information about insolvency. This is a worksheet that is prepared to determine if you can qualify for eliminating taxable income form a cancelled debt (Form 1099-C). Keep it with your tax files to show proof, as well as any other documentation to substantiate it, should you need it later.
- Guide to Debt Cancellation and your Taxes

If you do not qualify for insolvency or you the cancelled debt was not included in bankruptcy, then the amount reported is taxable.

@Raymond316

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Shwa

I have the same question essentially. With this clarification: my 1099C’s show the discharge of debts on different dates throughout the year because it took me awhile to work thru the settlements. The worksheets I completed for each discharge date show I was insolvent each time. However I’m less insolvent as the year progresses. A couple other past threads here have said to only submit a single 982, but a single 982 can’t reflect a factual and favorable outcome in my case.

please confirm it’s acceptable and expected to submit multiple 982s. One for each cancellation of debt discharge date.

thanks

AnnetteB6

Form 982 is completed and filed with your tax return in order to determine the amount of discharged indebtedness that may be excluded from your income. Since you would only file one income tax return that may include the discharged debt, only one Form 982 will be filed to cover the entire tax year.

@Shwa

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