perchdinner

1099c debt forgiveness

Recommended Posts

I sesarch the forum and only came away confused about the 1099c. I thoght the debt was forgiven and I didnt owe it anymore. I guess I was wrong , But I had gotten A 1099c from Chase last year for the two past due  accounts I had with them. I already filed the 1099 on my taxes last year. My question is should chase be reporting these as zero balances. THey are both still reporting at full balance. , I am cleaing up my report and this is my first dilemna. Thanks

Link to post
Share on other sites

Basically, any cancelation of debt aka debt reduction a card issuer grants is considered by the IRS to be taxable income to you.  Unless you can prove insolvency at the time the settlement agreement was made, you are on the hook for the tax.  Form 982 should be completed with your tax return and there's a worksheet to help you calculate insolvency (IRS Pub. 4681) - if your liabilities exceeded your debt at the time of the settlement, you should be excluded from some if not all of the tax liability.

 

To your question about whether the amount on the 1099-c is a valid debt:

 

You as the consumer can't be force to both pay a debt and show debt as income.

 

Contact the issuer and if they claim the 1099-C was a mistake,  demand to now what the mistake was.  If they say there was no mistake but the IRS required the 1099-C, demand to know which IRS code they're relying on.

 

By all means, demand an amended 1099-C be issued before you pay anything.

Link to post
Share on other sites
On 12/24/2015 at 0:11 PM, perchdinner said:

I sent a letter then called in they finally gave in. 

Can you provide more details on what you had in your letter and what you said during the phone call?  I have two of these as well and would like to have a zero balance show if possible. 

Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.