IRS References and Tools for Taxpayers with Canceled Mortgage Debt
Some taxpayers may want to research tax topics on their own. Refer them to www.irs.gov for the most up-to-date information on tax issues. To find information on canceled debt, advise the taxpayer to type, "cancellation of debt" in the website's search box.
Interactive Tax Assistant (ITA)
Another referral option is the Interactive Tax Assistant (ITA). This interactive tool is a tax law resource that takes the taxpayer through a series of questions and provides responses to questions on a number of tax law topics. ITA is available on www.irs.gov. To access this interactive tool, advise the taxpayer to type "ITA" in the website's search box.
One topic covered by ITA is, "Do I Have Cancellation of Debt Income on My Personal Residence?" The ITA application helps taxpayers determine if they have to report income from the cancellation of debt on their principal residence. In order to use this application, the taxpayer will need information about the canceled debt, including the outstanding balance, fair market value of the property, and reason the debt was canceled. Much of this information can be found on Form 1099-C, received from their creditor.
The ITA conducts an interactive interview addressing tax issues for the cancellation of a principal residence. After all the questions are answered, ITA provides a response screen and a simple way to print the entire interview and the final response.