Settled your debt? Don’t let the IRS tax the savings.
When a creditor forgives $600 or more, it files Form 1099-C and the IRS treats the forgiven amount as income — unless you were insolvent when it happened14. Most people who just finished a debt settlement programme were. We do the maths and the filing.
What is the insolvency exclusion?
The insolvency exclusion (IRC §108) lets you exclude cancelled debt from taxable income to the extent your debts exceeded your assets at the moment of cancellation. It is claimed on IRS Form 982 with a supporting insolvency worksheet — exactly the two documents we prepare.
$399
per tax year, all 1099-Cs included
- Insolvency worksheet for the cancellation date(s)
- IRS Form 982 prepared for filing
- Covers every debt cancelled in the tax year
- Free for clients who complete the Debt Relief programme
We are not a tax advisory firm; complex situations may need a CPA and we’ll say so before you pay.
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Frequently asked questions
What is a 1099-C?
A 1099-C is the IRS form a creditor files when it cancels $600 or more of your debt — including debt settled for less than the balance. The cancelled amount is generally treated as taxable income unless an exclusion applies.
What is the insolvency exclusion?
Under IRC §108, debt cancelled while you were insolvent — your total debts exceeded your total assets at that moment — can be excluded from taxable income, up to the amount of your insolvency. You claim it by filing IRS Form 982 with an insolvency worksheet supporting the numbers.
What does the service cost?
$399 per tax year, covering the insolvency worksheet and the Form 982 filing for every debt cancelled in that year. Clients who complete our Debt Relief programme get it free.
Are you tax advisors?
We prepare insolvency worksheets and Form 982 filings; we are not a tax advisory firm. If your situation involves business entities, real estate workouts or anything beyond consumer insolvency, we'll tell you to bring in a CPA.
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