Question

when cancelled debt is held jointly by both spouses what s the tax implication

Answer 1

If cancelled debt. was held jointly, They will show the amount of debt. cancelled for each spouse seperately while filing seperate individual returns. They both receive form 1099-c from the creditor and submit it while filing tax return. If they don't submit it there may be problem for them as they might be accused of hiding the income. There are some exceptions where they might not have to submit tax on debt cancelled and it will not be treated in the income but those are showing bankruptcy and certain forms have to be submitted for that also.

answered by: anonymous