This message is brought to you by the Taxpayer Advocate service your voice at the IRS hello I'm Nina Olson the National Taxpayer Advocate we in the Taxpayer Advocate service are bringing you a series of consumer tax tips to help you understand some important tax issues you may be facing this series focuses on the issue of cancellation of debt if you have lost your home to foreclosure or had your credit card balances written off or your car repossessed you need to know about the tax consequences of cancellation of debt income if you've received a form 1099 C cancellation of debt in the mail please don't ignore it and hope the problem will go away the lender sends this form to you and the IRS reporting the amount of cancelled debt income you may not have to pay taxes on some or all of the cancelled debt but you have to tell the IRS why your cancelled debt income is not taxable or else the IRS will treat it as taxable income to ask the IRS to exclude this amount from your income you need to complete form 982 reduction of tax attributes due to discharge of indebtedness and attach it to your return the tax rules about cancellation of debt income are complicated so to learn more about what steps to take you need to either read up about it yourself or go to a qualified tax advisor if you want to learn the rules yourself look over IRS Publication 46 81 canceled debts foreclosures repossessions and abandonments which you can find on the IRS website at www.opm.gov/tribalprograms Music member if you don't complete an attach form 982 to your return the IRS will treat your cancellation of debt income as taxable and you will owe...
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982 Form: What You Should Know
According to IRS Publication 4681: If you had debt cancelled and are no longer receiving payments in full for tax years ending after 2006, you may be entitled to claim a credit for that debt on Schedule A Amount of Tax Credit. For purposes of section 6501(c)(2)(W): 25% of the credit for the amount of any interest charged or accrued during the calendar year Amount of Tax Credit. For purposes of section 6501(c)(2)(W): 15% of the credit for the amount of any interest charged or accrued during the calendar year Amount of Tax Credit. For purposes of section 6501(c)(2)(W): 9.5% of the credit for the amount of any interest charged or accrued during the calendar year Amount of Tax Credit. For purposes of section 6501(c)(2)(W): 25% of the credit for the amount of any interest charged or accrued during the calendar year Form 982 — Reduction of Tax Attributes Due to Discharge — For taxpayers who are enrolled in a qualified tax preparation program and would be eligible to claim a credit under section 6501(c)(2)(W) or section 6501(d)(2)(W) for a tax year ending after 2006, you must file IRS Form 982 and report the interest due, reduced by certain amounts excluded under section 982. Amounts excluded from the computation of the credit due may be claimed as a credit against your Taxpayer Identification Number on your federal income tax return. Exported Forms 982: How to report. For taxpayers who filed an original form 982, and filed a reissued form 982 and report the amounts included in the reduced amount of the credit, you may use IRS Form 982B and list the tax paid on Form 982, Item 12, or you can include them under code “15” on line 21 of Form 982B. ▷ Attach this form to your income tax return. ▷ Go to to file IRS Form 982. OMB No. .
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