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Insolvency question

My girlfriend's w-2 lists 2519.70 in wages. 148.91 in Fed tax

She recieved a 1099-c for debt canceled (automobile loan) of

1761.19.

She has no assets. (bad divorce) I was told she could declare insolvency, ( by someone in this group) If she met the no assets criteria. I have downloaded and filled out form 982. So, is there anything I am missing in this procedure? Just attach form 982 along with the 1040 and send in(?) or is there more to it? Also I am assuming I do not show the 1761.19 on the 1040 as it is onform 982.

BTW I have declared her as a dependent, as she lived with me all year.

Thanks for any help

Reply to
WD
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She's not insolvent. As her income exceeded the debt, she had sufficient funds with which to pay it off but chose not to. I am intentionally disregarding living expenses since her total income wouldn't cover those anyway (and by you declaring her as your dependent, you're paying for her living expenses anyway).

Reply to
D. Stussy

Perhaps the debt cancellation is considered gross income and when added to her wages results in a total greater than 3,400. If that is the case then you can't claim her as a dependant.

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Reply to
Haskel LaPort

The cancellation of debt (1099-c) was in August, the income was in Sept-Nov. What I read on the IRS web site was "insolvent" at the time of the cancellation of debt. Make sense (?) or do I need more of an education ?

Thanks

Reply to
WD

Then it's not income. All she does is file the necessary form with her

1040.
Reply to
Phil Marti

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