Need help with 1099-C for a disputed debt - how to handle this on my 2024 tax return?

This is definitely frustrating, but you've got options. When you receive a 1099-C for debt you dispute, you don't automatically have to report it as income. First, try contacting the creditor again to explain the error and request they issue a corrected form. Document everything. If they refuse, you'll need to address it on your tax return. You can exclude the canceled debt from your income by completing Form 982 "Reduction of Tax Attributes Due to Discharge of Indebtedness" and attach it to your tax return. Since this was a disputed debt due to identity theft, you'd select the "Other" exclusion and write in an explanation. Additionally, include a statement with your tax return explaining the situation, including that the debt was disputed due to identity theft, along with copies of your police report and any correspondence with the creditor showing your dispute.

I had almost the exact same issue last year with a 1099-C for about $8,000. After stressing for weeks, I found this tool called taxr.ai (https://taxr.ai) that really helped me figure out how to handle it properly. I uploaded my 1099-C and it analyzed everything and gave me step-by-step instructions for properly documenting and disputing the income. The tool basically confirmed what the other commenter said about Form 982, but it also generated a custom letter explaining my situation that I could include with my return. It saved me hours of research and stress since I was terrified of getting this wrong.

Just wanted to update - I ended up trying taxr.ai for my situation with disputed debt from an old credit card. The service actually exceeded my expectations. It guided me through the entire process of filling out Form 982 and showed me exactly how to document my dispute. What surprised me most was how it analyzed my specific situation and showed me where on my tax return the canceled debt would normally be reported and how the exclusion works to offset it. I was able to confidently file my taxes last month without claiming that "income" and included all the proper documentation. Got my refund last week with no issues! For anyone dealing with 1099-C issues, definitely worth checking out. Saved me from paying nearly $1,700 in taxes on debt that wasn't legitimate in the first place.

If you can't get the creditor to correct their mistake, you're going to need to talk to someone at the IRS to make sure this is handled correctly. Good luck getting through to them though! I spent literally 4+ hours on hold last month trying to resolve a similar issue. After giving up multiple times, I found this service called Claimyr (https://claimyr.com) that actually got me through to a real IRS agent in about 20 minutes. They have this system that basically waits on hold for you and calls you when an agent picks up. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with walked me through exactly how to document my disputed 1099-C situation and what forms to include. Saved me so much stress and potentially an audit headache.

Ok I have to eat my words here. After my skeptical comment I was still desperate to talk to the IRS about my own 1099-C situation so I tried Claimyr anyway. I was fully expecting it to be BS but I got a call back in about 35 minutes and was connected to an actual IRS representative! The agent confirmed everything that others have said here - I needed to file Form 982 and include a written explanation about why the debt was disputed. She also advised me to include any documentation showing my dispute with the creditor. She said people handle disputed 1099-Cs incorrectly all the time and end up paying taxes they don't owe. I'm still shocked this actually worked after spending countless hours trying to get through myself. Definitely worth it for the peace of mind of talking directly to the IRS about this situation.

Had this exact issue a few years ago. The key is to act quickly and document EVERYTHING. Here's what worked for me: 1) Send a certified letter to the company that issued the 1099-C demanding they correct it 2) File a complaint with the CFPB about the incorrect 1099-C 3) Include Form 982 with your tax return 4) Write "CORRECTED 1099-C REQUESTED FROM ISSUER, DISPUTED DEBT" in red ink at the top of a copy of the incorrect 1099-C and attach it 5) Include a detailed statement explaining the situation The IRS actually sided with me and I didn't have to pay taxes on the "canceled debt" that wasn't mine to begin with. Don't let them bully you!

I'm confused about something...if you exclude the canceled debt using Form 982, do you still need to report the 1099-C amount on your 1040 first and then subtract it? Or do you just not include it at all in your income? My tax software is asking me to enter all 1099 forms but doesn't make it clear how the Form 982 offset works.

Carlos, I'm really sorry you're dealing with this - identity theft situations are incredibly frustrating, especially when they keep haunting you years later. The good news is that you absolutely should NOT have to pay taxes on debt that was never legitimately yours. Here's what I'd recommend based on what worked for me in a similar situation: 1) **Document everything immediately** - Get copies of your original police report from 2019, any correspondence you've sent to this creditor, and responses from credit bureaus about the identity theft. 2) **One more attempt with the creditor** - Send them a certified letter (return receipt requested) explaining this is fraudulent debt due to identity theft and demanding they issue a corrected 1099-C showing $0. Give them 30 days to respond. 3) **File Form 982 with your return** - If they won't correct it, you'll need to exclude this from your income using Form 982. Check the box for "other" exclusions and write in "Disputed debt - identity theft" with a clear explanation. 4) **Include a detailed statement** - Attach a letter to your return explaining the situation, referencing your police report number, and listing all the documentation you're including. The key is being proactive and thorough with your documentation. The IRS deals with these situations regularly, and if you handle it properly upfront, you shouldn't have any issues. Don't let this company's mistake cost you $1,500+ in taxes you don't owe!

Carlos, I've been through something very similar with a 1099-C for debt that resulted from identity theft. The stress is real, but you have solid options to handle this properly. First, definitely try one more certified letter to the creditor explaining this is fraudulent debt and requesting a corrected 1099-C. Keep copies of everything. If they refuse, you'll need to use Form 982 to exclude this from your taxable income. Since this stems from identity theft, you have a legitimate basis for exclusion. The form has an "other" category where you can specify "disputed debt due to identity theft." Most importantly, include a detailed written statement with your tax return explaining the situation. Reference your 2019 police report number and attach copies of: - The original police report - Any correspondence with the creditor showing your dispute - Documentation from credit bureaus about the identity theft The IRS sees these situations regularly. As long as you document everything properly upfront, you should be fine. Don't let their mistake cost you taxes on money you never actually received or benefited from. One last tip: if you're using tax software, make sure it properly handles the Form 982 exclusion so the 1099-C amount doesn't get added to your income even though it's reported. The software should handle this automatically once you complete the Form 982 section. You've got this - just stay organized and document everything!

Carlos, I went through almost the exact same situation two years ago - 1099-C for about $4,800 from debt that resulted from identity theft in 2018. The stress was overwhelming at first, but it's absolutely manageable if you handle it correctly. Here's what worked for me step by step: **Immediate Actions:** - Send one final certified letter to the creditor (I used USPS certified mail with return receipt). Give them 30 days to issue a corrected 1099-C showing $0. Reference your original police report and include copies of your previous dispute letters. - File a complaint with the CFPB online - this creates an official record and sometimes motivates creditors to fix their mistakes. **For Your Tax Return:** - Complete Form 982 and select "Other" for the exclusion type. Write in "Disputed debt - identity theft per police report [your report number]" - Include a clear written statement explaining the timeline: identity theft in 2019, police report filed, ongoing disputes with creditor, debt never legitimately owed - Attach copies of your police report and any creditor correspondence showing your disputes **Tax Software Tip:** Most software will ask you to enter the 1099-C amount first, then guide you through Form 982. The software should automatically exclude that amount from your taxable income - just double-check your final return shows $0 additional income from the canceled debt. I never heard back from the IRS about mine, got my refund on schedule, and saved about $1,200 in taxes I didn't actually owe. The key is being thorough with documentation upfront. You've got a solid case with that 2019 police report!