Received a 1099-C

[abbafan]

So apparently USAA decided to screw up my $2k refund this year by reporting 3 "forgiven" debts that total to approximately $10k to IRS. My questions is, are they now legally obligated to report $0 balance for each account to each CRA? If I don't see that happenning within 30 days, which law can I rely on while disputing the account information reported?

[Anonymous]

They *should*, but some argue that its not required under the law, and court decisions are somewhat split on the whole thing.

[Anonymous]

Also, before paying taxes on that 1099-C income, check with a Tax Professional and find out if you may be exempt from it. Many times people are but don't know it.

[SunriseEarth]

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@Anonymous wrote:

Also, before paying taxes on that 1099-C income, check with a Tax Professional and find out if you may be exempt from it. Many times people are but don't know it.

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Agree.   There's a form you can complete to exclude it if you are insolvent.  IIRC, you can exclude the income to the degree you are insolvent.

[wa3more]

File form 982 if you are insolvent. 

Creditor can still show balance even if 1099 was issued. Technically, it does not go away because of the IRS required 1099. The way around this is to send 1099's to CRA's, they will zero out the balance.