1099-C

[bsat873]

I filed Chapter 7 Bankruptcy but still have not been discharged. My credit union however sent me a 1099-C for the debt discharged during Bankruptcy. Do I need to report this on my taxes?

[LadyInTheRed]

I posted a blog entry on the topic: http://www.bkforum.com/blogs/ladyint...ischarged-debt

The fact that you have not yet been discharged could be an issue. I would wait until receiving a discharge before filing your tax return unless you meet one of the other exclusions like insolvency or principal residence. Read IRS Publication 4681 carefully.

[bsat873]

LadyInTheRed, thank you very much for this information! I have read it and everything looks good.

Do you have a tax preparation service that can you'd recommend for this? I have usually used Turbo Tax but they're wanting me to buy the CD version just to get access to the form 982 and based on your comment even that may not get me what's needed. I would prefer electronic file.

[LadyInTheRed]

I use TurboTax too. But, after a little research it looks like TaxAct may handle form 982 better: https://www.taxact.com/tsupport/FAQD...p?Question=879

I didn't receive a 1099-C. In fact my lender sent me a letter a couple of days before my Chap 13 discharge and told me they were going to forgive my second mortgage and then recorded a lien release. I thought the letter was odd, but was glad that I didn't have to record a copy of my lien strip order. They later sent me a letter saying the first letter was in error and that they knew the loan was discharged. So, I am pretty sure I won't get a 1099-C. But, I did look into how TurboTax deals with it because I heard it was an issue back before any version of TurboTax included the form. They just told you to see a tax adviser if you had a 1999-C. I resigned myself to the fact that I would have to file a paper return if I got a 1099-C. If you don't want to buy the CD version of TurboTax or swich software, I would just prepare your return using the downloaded version, choose the file by mail option and download form 982 from the IRS website and attach it to the return prepared by TurboTax.

[bsat873]

Thanks Ladyinred! You've been most helpful throughout this process for me. This Sunday is my 60th day after my 341 meeting so my discharge should be right around the corner.

I'm going to give Taxact a shot since I've heard paper filings are more likely to be audited and not sure the validity of that but I don't want to find out, ha. Again, thanks again for all of your insightful information.