Since we should not include this debt on our taxes, what should we do with the 1099-c?
Assuming a 1099-C, get IRS Form 982 and follow the instructions. It is painlessly easy.
Wills and Living Wills Lawyer
There is an IRS Form which you should complete to explain why the 1099 - c form you received is not included in you 2012 tax return. The form can be obtained from www.irs.gov
Mr. Geisenberger is a Pennsylvania-licensed attorney only. The information is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation. Answering this question does not in any way constitute legal representation. Contacting Jacques H. Geisenberger, Jr., P.C.,does not constitute legal representation, nor is any information you provide protected by attorney-client privilege.
Divorce / Separation Lawyer
You are correct that discharged debt is not includible in income. Take the 1099-C to your accountant and he or she will know what to do with it and how to account for it on your return.