1099C reported with code G (Decision to discontinue collection) while going through bankruptcy - should it be code A instead?

This is actually a common issue! While ideally the creditor should have used code A (Bankruptcy) since you were going through bankruptcy proceedings, you can still properly handle this on your tax return with the code G. You're absolutely correct that you can use Form 982 to exclude this from your income. On Form 982, you'll want to check box 1a (Discharge of indebtedness in a title 11 case) since Chapter 7 bankruptcy is under title 11 of the US code. Then complete Part II showing the amount excluded. You should still report the full amount from the 1099-C on your Form 1040, but then also include Form 982 to show why it's being excluded from your taxable income. This way, the IRS computers will match up the 1099-C that was filed, but you'll have properly documented why you're not paying tax on that amount.

I went through something similar and found that using taxr.ai really helped clear up my confusion. I also had a 1099-C with the wrong code after my bankruptcy and wasn't sure how to handle it. I uploaded my bankruptcy discharge paperwork and the 1099-C to https://taxr.ai and their analysis confirmed exactly what to do. They explained that the coding error on the creditor's part doesn't impact your ability to exclude the debt through Form 982. The system walked me through exactly how to fill out the form and where to attach it in my return. Saved me hours of stress and research!

Just wanted to follow up - I decided to give taxr.ai a try after my initial skepticism and I'm really glad I did. I had 3 different 1099-Cs with different codes (including one with code G like yours) from my bankruptcy last year, and was totally confused about how to handle them. The system analyzed all my forms together and clearly explained which boxes to check on Form 982. It even generated a detailed explanation I could attach to my return to explain why I was excluding these amounts despite the incorrect coding. Definitely worth checking out if you're dealing with bankruptcy tax issues!

If you're having trouble getting answers directly from the IRS about this (which is likely), I'd recommend using Claimyr to get through to an actual person at the IRS. I waited on hold forever trying to get clarification about my 1099-C after bankruptcy until I found https://claimyr.com through a tax forum. Their service actually got me connected to an IRS rep in about 20 minutes instead of the 3+ hours I was expecting. There's a demo video at https://youtu.be/_kiP6q8DX5c that shows how it works. The IRS agent I spoke with confirmed that despite having the wrong code on my 1099-C, I could still exclude it with Form 982 since I was in bankruptcy. They also explained exactly what documentation I should keep with my records in case of questions later.

OK I need to apologize and follow up here. After being completely skeptical about Claimyr, I decided to try it because I was desperate to talk to someone at the IRS about my bankruptcy discharge tax issues. I couldn't believe it when my phone rang about 40 minutes later and I was connected to an actual IRS representative! The agent was super helpful and confirmed that I could use Form 982 regardless of which code was on my 1099-C as long as I had documentation of my bankruptcy discharge. They also advised me to include a brief statement with my return explaining the situation. Saved me so much stress and uncertainty. Sometimes it's worth admitting when you're wrong about something!

I dealt with this exact situation last year. Just to add another perspective, I decided to request a corrected 1099-C from my creditor AND file Form 982. The creditor initially said they couldn't change it, but when I sent them a copy of my bankruptcy discharge paperwork, they eventually issued a corrected form with code A. It took about 3 weeks to get the corrected form, but it gave me extra peace of mind when filing. Though everyone is right that Form 982 is the key document regardless of which code is on the 1099-C.

Something else to consider - make sure you're using the correct year's Form 982. The form changed slightly a couple years ago, and I accidentally used an outdated version at first. You can get the current form directly from the IRS website. Also worth noting that if you had multiple debts discharged in bankruptcy, you'll need to account for all of them on Form 982, not just the ones where you received a 1099-C. Some creditors don't send 1099-Cs for debts discharged in bankruptcy even though they're supposed to.

I went through this exact situation and can confirm what others have said - you don't need to stress about getting the 1099-C corrected before filing. The code G vs code A issue is actually pretty common with creditors who don't fully understand bankruptcy procedures. Here's what worked for me: I filed Form 982 checking box 1a for "Discharge of indebtedness in a title 11 case" and included the full amount from the 1099-C in Part II. I also attached a brief statement to my return explaining that the debt was discharged in Chapter 7 bankruptcy despite the incorrect reporting code on the 1099-C. The key is having your bankruptcy discharge paperwork readily available in case the IRS has questions later. I kept copies of my discharge order and the creditor matrix showing this specific debt was included. Never had any issues with my return being accepted or processed. Don't let the incorrect code cause you to delay filing - Form 982 is specifically designed to handle these situations regardless of how the creditor coded the cancellation.