1099c-debt guy

[hanjenden]

What is the name of your state?AK

This information was given to me at H & R Block by a woman I was told was a former IRS agent. It would be great if I could go back and do an amended return, even if I had to hire a CPA. My husband also had one 1099c, and between the two of us we had to pay the extra amount, whereas we would have gotten about a $4,000 refund without the forgiven debt.

 

[Ladynred]

Were you insolvent (more debts than assets) at the time this debt was 'cancelled' ?? If so, then you do not have to claim the amount as income at all. You would need to fill out a Form 982 to prove insolvency.

 

[hanjenden]

Yes, I was insolvent, but my husband was not. Since we filed a joint return, the agent told me I could not claim insolvency for only my share, even though we had no joint assets. The assets my husband has were obtained prior to our marriage.

I had previously found information on a tax law website that said insolvency could be claimed by one spouse even on a joint return as long as the assets could be clearly separated. The only thing I owned at the time of the debt cancellation was a 1999 Ford Explorer, and my wedding ring. I am a student with no income at the time. I still only have the above mentioned assets, and I'm still trying to settle two more accounts of about $35,000 total.

 

[Debt Guy]

Filing seperate returns might have been an answer but I don't know what you can do now.

I don't think Block has the best tax advice in the world -- their goal is to keep themselves out of trouble.

If you have already filed, the issue will be to file amended returns.

 

[hanjenden]

We thought about that and did a rough estimate on filing separately. It would have increased my husband's tax liability too much to do us any good. Thanks for the responses!