Has anyone used TurboTax or H&R Block software to handle the 1099-C and Form 982? I'm not sure if the basic versions cover this or if I need to upgrade to the premium version.

I went through almost the exact same situation last year with $16k in settled debt and those surprise 1099-C forms. The "phantom income" aspect is really frustrating when you're already struggling financially. One thing that helped me was understanding that the insolvency exclusion isn't all-or-nothing. Even if you can only exclude part of the canceled debt, it still reduces your tax liability significantly. In my case, I was able to exclude about $12k out of the $16k, which saved me roughly $3,000 in taxes. Also, don't panic about the timeline - you have until the tax filing deadline (plus extensions) to figure this out and file Form 982. I'd strongly recommend keeping detailed records of your financial situation from the date the debt was forgiven, as others have mentioned. The IRS worksheet for insolvency can be found in Publication 4681 if you want to try calculating it yourself first. If you're feeling overwhelmed, consider consulting with a tax professional who has experience with debt forgiveness situations. It might cost a few hundred dollars upfront, but it could save you thousands in the long run and give you peace of mind that everything is filed correctly.

Just want to clarify something important: you don't necessarily have to pay taxes on forgiven debt if you were insolvent when the debt was forgiven. Insolvency means your total liabilities exceeded your total assets right before the forgiveness. For example, if your assets were $20,000 and your total debts were $35,000 right before the $5,300 was forgiven, you were insolvent by $15,000. Since your insolvency ($15,000) is greater than the forgiven debt ($5,300), you might not have to report ANY of it as income.

I went through almost the exact same situation last year - settled $15k in credit card debt for about $8k. You're absolutely right to be thinking about the tax implications now rather than being surprised later! Yes, you'll likely receive a 1099-C form from your credit card company reporting the $5,300 difference as canceled debt income. However, don't panic yet - there are several exclusions that might apply to your situation, with insolvency being the most common one for people dealing with debt settlement. The key is to calculate your financial position right before the debt was canceled. If your total debts exceeded your total assets at that moment, you may qualify for the insolvency exclusion under Form 982. This could potentially reduce or eliminate the taxable income from the forgiven debt. I'd strongly recommend documenting everything now while it's fresh - make a list of all your assets (bank accounts, car value, any property, etc.) and all your debts (other credit cards, loans, etc.) as they existed right before the settlement. You'll need this information for the insolvency calculation. Also consider consulting with a tax professional who has experience with debt forgiveness situations, especially if the numbers are close or if you have other complicating factors in your financial situation.

Just to add from my experience as a college student recently - if your daughter received any 1098-T forms from her school, those can help track qualified education expenses. Also, make sure you're considering the full cost of attendance, not just tuition. Room and board, books, required fees, etc. all count toward the support calculation. And don't forget things like medical expenses, car insurance, clothing, and personal items that you might pay for throughout the year. Those smaller expenses can add up and might push you over the 50% threshold!

Great thread everyone! I went through this exact situation two years ago with my son. One thing that really helped me was creating a detailed spreadsheet to track every expense category - it made the 50% support test much clearer. A few additional points that might help: 1. Don't overlook indirect support you provide - like when your daughter stays with you during breaks, the IRS has guidelines for calculating the value of lodging you provide. 2. If you're paying for her car insurance, registration, maintenance, or gas money, those all count toward your support calculation too. 3. Medical and dental expenses you pay (even copays or prescriptions) count as support from you. Based on your numbers ($8,500 child support + phone bills + health insurance premiums + any other direct payments), you might be closer to that 50% threshold than you think. The key is documenting everything thoroughly and being comprehensive about what constitutes "support." Good luck with your calculations! The peace of mind from getting this right is definitely worth the effort.

One thing to consider - are you filing any other complicated schedules besides Schedule C? I tried FreeTaxUSA last year for my business but gave up because I also had investment income, rental property, and some foreign tax issues. Ended up going back to a professional. Construction business should be straightforward though as long as you don't have complicated depreciation schedules for expensive equipment or vehicles. What software were you using before?

I made the switch from a tax preparer to FreeTaxUSA for my electrical contracting business last year and it went smoothly. The IRS really doesn't care what method you use to prepare your return - they only care about accuracy. Since you have QuickBooks P&L reports already organized, you're ahead of the game. FreeTaxUSA's Schedule C section walks you through each expense category and even has helpful explanations for what qualifies. Just make sure you have good documentation for vehicle expenses, equipment purchases, and any home office deductions if you claim them. One tip: when you import your business expenses, double-check that similar costs aren't getting split between different categories (like materials going to both COGS and supplies). The software is pretty good but it's not perfect at categorizing everything from QuickBooks exports. Filing both 2022 and 2023 shouldn't be an issue - just treat them as separate projects and take your time with the first one to get familiar with the interface.

Honestly, I think you're overthinking this. Lots of people get small amounts through cashapp and venmo and don't report it. The IRS is way too busy going after big fish to care about your $3k unless you're already being audited for something else. Not saying you SHOULDN'T report it, just being realistic about the situation. I have friends who do OF and similar stuff and they don't report anything under like $10k with no issues.

I understand the awkwardness of this situation - tax questions about sensitive income sources can be really stressful when you can't ask your usual help! Just to reinforce what others have said: yes, this is taxable income that needs to be reported. The key factor is that there's a clear relationship between your content and the payments received, which makes it business income rather than gifts. A few practical tips for your situation: - Keep detailed records of all payments received, even without official forms - Track any expenses related to content creation (equipment, internet portion, etc.) as these are deductible - Consider setting aside about 25-30% of future earnings for taxes (income + self-employment tax) - You can describe the income generically as "digital content creation" on your tax forms The good news is that $3,300 over 3 months isn't a huge amount tax-wise, and with proper deductions, your actual tax liability will be much less than the gross income. Filing correctly now also protects you from potential penalties and interest if the IRS catches unreported income later. Don't let the awkwardness of the situation lead to tax problems - it's much easier to handle this properly upfront than deal with IRS issues down the road!