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mcalli
Apr 7, 2011, 01:12 PM
I am not required to file a 1040 tax form for last year (2010), either by a filing status of married filing jointly or married filing separately. My problem is that I received some 1099-C's in February which claimed that this company that I don't know had canceled some debts. So, I need to let the IRS know that I am insolvent. I was wondering if anyone knows if I absolutely have to file this 982 or if I could just fill out an insolvency worksheet with my info and an explanation and mail it in without filing any type of forms with the IRS.
Quoting from page 86 of the 2010 Tax Guide, "Do not include a canceled debt in your gross income in the following situations...The debt is canceled when you are insolvent."
So, I don't have to add this canceled debt to my income and I don't have to file a 1040. Am I right?

AtlantaTaxExpert
Apr 15, 2011, 01:24 PM
Unless you have some legal action such as a bankruptcy to PROVE your insolvency, you need to file a tax return to account for that 1099-C debt.

Crunch the numbers using on-line tax software; you MIGHT find you are eligible for some tax credits due to the Form 1099-C income.

If you need professional help filing your return, email me at [email protected] or [email protected].