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Printable Form 982 New Hampshire: What You Should Know
Frequently Asked Questions on Forms 982, 982‑EZ and 982‑S What is the use of Form 982? If you are discharged under Chapter 7 or a state bankruptcy plan, Form 982 may eliminate or reduce the amount of income tax that you owe. If you are discharged under Chapter 11, 10 or 12, the amount must be included in your gross income. Forms 982, 983 and 984 may also be used to reduce tax liability due to nonpayment of tax. How do I use Form 982, Reduction of Tax Attributes Due to Discharge? If you are discharged under Chapter 7 or a state bankruptcy plan, you can exclude from your income any amount of discharged indebtedness. If you are discharged under Chapter 11, 10 or 12, you can reduce the amount of dischargeable indebtedness by the amount of the discharge. For example, if you have a 500,000 mortgage and are discharged under Chapter 11, you could exclude 250,000 of this debt. If you cannot exclude discharged indebtedness under section 108 because other debts exceed 500,000 or if you cannot exclude dischargeable indebtedness under section 106 because other debts do not exceed 500,000, or if you cannot reduce this amount of deductible debt below zero, then you must pay the tax due. If you cannot use Form 982, then you pay the tax due immediately on or before the due date of the return for the tax year in which the tax was paid. What if the amount of tax required to be excluded doesn't fit in the section 408 deduction limit? Example: Carroll Oakes owed 1,000 in state taxes in 2007. His state did not exclude any portion of this amount from his income, so he paid 500 on his 2023 federal income tax return (with his state tax liability being 50,000). The remainder of his income would require reduction into capital gain. The amount of this reduction will be added to the “additional tax” amount on line 38 of Schedule S (Form 1040). The tax due for 2023 would be 250 plus any additional tax of 300. When does the reduction take effect? All income for the tax year that results from the discharge will be deducted prior to applying the reduction (to the extent this amount exceeds the exclusion or reduction amount) on line 38 of Schedule S (Form 1040).
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