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1099-c after filing

My husband filed his taxes about 2 weeks ago and already received his state refund. Yesterday, we got a 1099-C in the mail, stating that a company had "cancelled" just under $5400 on an account that we settled last year. I found this website:
Canceled Debts IRS 1099-C | Charged off or forgiven

We had no idea that this could happen so we never went through the process of requesting that they not report this money; can I try to argue that they agreed to settle the debt in full so there was no "cancellation" of debt, like the above website points out?

Also, this debt was already "charged off" by one collector about 4 years ago; are they allowed to do this twice on the same debt? Wouldn't that be counting it as income twice?

You will report debt cancellation as income. Read about debt cancellation, Your U.S. Tax Return: The U.S. Income Tax Topics 1

You will file amended tax return. For amending your tax return, you must file IRS Form 1040-X. Column A is what was on the original return, Column C is what should have been there (that is corrected amounts) and Column B is the difference. Complete these columns and then refigure your tax.

That's what we were told. But according the link I posted, can't we get out of this by showing that they agreed to settle the account "in full" for a lesser amount? We got the entire account cleared off his credit report because they weren't reporting it properly. And like I asked, can they "charge off" the same debt twice from 2 different collectors? Wouldn't that be counting the money as "income" twice?

I also forgot to mention that this 1099-C was postmarked 02/02/09; I know the other forms have to be postmarked by 01/31. Could I use that as a means to push this onto next year's taxes?

1099-C for 2008 is income for 2008.

The filing deadline for Form 1099 was extended to 15 February 2008, so you are stuck claiming it on your 2008 tax return.

You CAN appeal the amount in the Form 1099-C if you can show that they agreed to a different amount, but do NOT let that stop you from amending the return and paying the taxes immediately.

Quote:

Originally Posted by AtlantaTaxExpert

The filing deadline for Form 1099 was extended to 15 February 2008, so you are stuck claiming it on your 2008 tax return.

You CAN appeal the amount in the Form 1099-C if you can show that they agreed to a different amount, but do NOT let that stop you from amending the return and paying the taxes immediately.

Sorry to keep posting about the same thing but I still had a few questions.

1) Like I said before, the collection agency agreed to pay off the account for the settlement amount; we had no clue the "cancelled" amount would be considered income. Can we try to argue that the collection agency told us that settling the account would take care of everything? Like my husband pointed out, he would have been better off paying the account in full, rather than have it show up as a settlement as well as having to pay taxes on it.

2) Should the person preparing his taxes have asked him this question or is that usually not standard?

3) This debt had already been charged off by the original creditor; can the collection agency charge it off also? Wouldn't that be counting the same debt as income twice?

Thank you to everyone who has taken the time to help us!

1. You can try and argue with the collection agency that the amount should be considered "paid in full" rather than cancelled, but as the web site you cited says, they can refuse. I bet it's to their advantage to show the debt as "cancelled" as opposed to "forgiven," -- the cancelled debt may be considered as an expense to them, which lowers their reportable income as a business, and hence lowers their taxes. But it wouldn't hurt to ask.

2. The tax preparer should ask what 1099 forms you've received, if any. Since you didn't have all your 1099's in hand whenyou went to him, it's not his fault.

3. You need to clarify what you mean by "this debt had already been charged off by the original creditor." Did you receive a 1099-C from the original creditor, so that this one is the second 1099-C you're gotten? Or are you saying that they sold the debt off to another agency? If the former you have a case, if the latter you don't.

Quote:

Originally Posted by ebaines

Did you receive a 1099-C from the original creditor, so that this one is the second 1099-C you're gotten? Or are you saying that they sold the debt off to another agency?

I'm not 100% positive if he received a 1099-c from the original creditor; it happened a few years before I knew him. I do know that the original creditor reported it to the credit bureau as being "charged off" so would that mean he would have gotten one back then?