Professor Annette Nellen

Tax season has started and by now (February 6) we should have our 1099s and W-2s and perhaps a few other reporting forms. We need to review them for accuracy, even forms from the IRS, such as Letter 6419 on the advance Child Tax Credit (see IRS Fact Sheet (FS-2022-5) on possible errors).

Some forms, such as Form 1099-C on cancellation of debt might be correct from the issuer’s tax requirements, but not correct for the recipient. For this 1099-C issue, I’ve blogged on it before (4/13/13 and 6/21/21). The 1099-C instructions also remind the recipient that their debt might not have really been discharged and they should not report the income until the year it has truly been discharged. The IRS doesn’t tell the recipient what to do with the 1099-C that isn’t reportable. That’s too bad because when the recipient figures out it isn’t reportable for the year printed on the 1099-C, the IRS doesn’t know.

Read More