If I receive a 1099-C from for cancellation of student debt, and it meets the criteria for exception to inclusion in gross income, do I still report it on my tax return? Or do I fill out a form 982?

ANSWER

The BIDaWIZ Team's Answer:

No, you would not complete Form 982 since it is an exception to inclusion in gross income. Form 982 is used when the cancelled debt qualifies for the exclusion to gross income. These are two different reason as per IRS Publication 4681 & IRC Section 108(f). We're surprised that you received a 1099-C form since the exception applied as you noted. We would recommend that you contact the issuer to determine why this amount was included. Also, there's typically a code with the 1099-C amount that may determine why this amount was included. Do you know what that code is? If they aren't willing to correct the issue, we would recommend that you attach a statement to your return that explains why you were not required to include the cancelled debt amount.