How is the amount reported on Form 1099-C reported to the IRS?
If, after careful consideration, it is determined that the amount reported on Form 1099-C represents taxable income to the taxpayer, where it is reported on Form 1040 depends on the type of debt. For example, nonbusiness canceled or forgiven debt would be reported on Line 21 of Form 1040. If the debt is business debt and the taxpayer uses Schedule C or Schedule F to report business income and deductions, the debt would be reported on those Schedules. • Should a taxpayer attempt to report canceled or forgiven debt on a self-prepared tax return? This is dangerous territory for most taxpayers. First, it may be the first and only time a taxpayer has ever received a Form 1099-C. Unless inclined to learn about the issues, some taxpayers will simply ignore the issue and hope it escapes IRS detection. However, make it a point to add a question to your organizer in bold letters that asks if the taxpayer received a Form 1099-C during the year. If interviewing a taxpayer face-to-face, make sure t
Related Questions
- Should I advise the IRS why amounts reported on Form 1099-B do not agree with my Schedule D for proceeds from short sales of stock not closed by the end of year that I did not include?
- Is the $3,000 PSO exclusion for payment of health care premiums reported to the IRS on Form 1009-R or Form 1040?
- Why are nontaxable distributions reported to the IRS on Form 1099-DIV?
