I received a 1099-C for forgiveness of student loan due to total and permanent disablility. Is this considered taxable income?

Asked 6 months ago - Amarillo, TX

I thought I was in a 3 year monitoring period and was surprised to receive the 1099-c. Does this mean it has been forgiven for sure. I have already filed my taxes. What should I do.

Attorney answers (3)

  1. Shaye Larkin

    Contributor Level 20

    4

    Lawyers agree

    Answered . This would normally be considered taxable income but there are some exceptions, one of which is the insolvency exception. You need to discuss this with an experienced tax preparer or CPA who can advise you whether you fall within any of the exceptions to taxation.

    The information provided herein is general information only and not legal advice. The information provided herein... more
  2. Peter Walter Weston

    Pro

    Contributor Level 17

    1

    Lawyer agrees

    Answered . This form usually indicates that you have received a taxable benefit, in the form of not having to repay a debt.
    This is evidence that the creditor may have abandoned collections, although the IRS considers this phantom income, unless you file bankruptcy and receive a discharge, which can be an exception.
    A tax professional may be of assistance, and there is a tax form available to claim this deduction.
    You may wish to prepare for an adjustment of your taxes from the IRS in the future.
    If your debts are overwhelming, this may be a good time to file, to discharge all your debts, including this tax issue.

    General legal advice is offered for educational purposes only. A consultation with a qualified attorney is... more
  3. Michael Glynn Busby Jr.

    Pro

    Contributor Level 19

    Answered . Yes, this is taxable, consider a chapter 7 bankruptcy

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