Insolvency Calculator for IRS Form 982 Available, Updated for 2016!
If you settled a debt in 2016 (or prior years) and had more than $600 forgiven by a creditor, you will be receiving a 1099-C for “Cancellation of Debt Income.” That “income” has to be treated as ordinary income like your paycheck, unless you have an exemption for “insolvency.” In other words, if your net worth was negative at the time the debt was forgiven, then you can offset the 1099-C income up to the amount by which you were negative, or insolvent.
Calculating insolvency can be a tricky process, and the IRS form used to claim the exemption is the notorious Form 982 — affectionately called “the tax form from Hell” due to its complexity. Consumers often waste countless hours trying to decipher the meaning of phrases like, “interest in a pension,” “reduction of tax attributes,” or figuring out how to handle a series of 1099-Cs rather than a single 1099-C.
ZipDebt’s IRS Form 982 Insolvency Calculator solves all these problems and provides instructions in plain English on how to calculate and claim insolvency. In the User Manual, you’ll find answers to common questions about handling multiple 1099-Cs. The calculator is an Excel based spreadsheet, and the User Manual walks you through everything you need to understand. The cost is only $29, and this calculator will save you many wasted hours and frustration. The product has been updated for the 2016 tax year.