You are a guarantor, and so you should be off the hook. As a co-signer who did not received the loan money or benefit from it, you should not receive a Form 1099-C from the lender. If you do receive Form 1099-C, you should contact the lender and tell them to correct the mistake.
When do creditors have to file a 1099-C?
Until 2016, IRS rules allowed creditors to file a 1099-C if no payments had been made on a debt for 36 months. This resulted in many 1099-C forms being issued for debts that were delinquent but not actually forgiven.
Where is The 1099-C listed on a 1040?
On a standard 1040 individual tax return, list the 1099-C information on Line 21 under “Other Income.” If you are planning to take any exclusions, you will also need to attach Form 982. Q: What if there is a mistake on my 1099-C? Unfortunately, mistakes are common.
What happens if you rescind a 1099-C form?
Rescinding the 1099-C will alert the IRS that it was issued in error. If the creditor will not rescind the form or confirm the debt is forgiven, you will need to use the IRS dispute process outlined in publication 4681 to show that no taxes are owed.
What happens when you get a 1099-C for student loans?
To discharge an obligation, you are released from it. It’s only natural to believe that student loan forgiveness works the same way. So, when you get your student loans forgiven, you may celebrate, believing that it’s over. You don’t ever have to think about those loans again. Right? And then you get a 1099-C in the mail. What is a 1099-C?
What does a 1099-C do for forgiven debt?
It’s a tax document that outlines how much of your debt was forgiven so you can report it on your taxes. Similar to a W-2, you and the IRS will receive a 1099-C in the mail for the year in which your debt was canceled. It turns out that most debt that is forgiven is then taxed as income.
Can a co signer count forgiven debt as income?
Fortunately, however, the Internal Revenue Service takes a logical view of forgiven debt for co-signers. Treasury Regulation Sec. 1.6050P-1 (7) says that for purposes of filing, “a guarantor is not a debtor.” It differentiates between those who get the benefit of a loan and those who guarantee its repayment.
