How to File for IRS Debt Relief
IRS debt relief does not guarantee that your debts will be completely discharged. You may also have to pay taxes on any debt that your creditors do agree to discharge in this manner. If your taxes are complicated, you may want to talk with a tax attorney or other tax expert who can give you the right advice for your situation.
- Locate a copy of IRS Publication 4681 and use the information within to see whether your debt qualifies for IRS debt relief. This publication will also help you to determine whether your debt relief would be taxable.
- Contact each of your creditors and ask them to submit to you a copy of IRS Form1099-C. This is also called the IRS Debt Cancellation form. It lets the IRS know that your creditor has dismissed the debt and what that amount was. Some creditors may not be willing to dismiss your debt, so be prepared to negotiate further if this is the case. Sometimes they may be willing to work with you in other ways to discharge your debt.
- Complete IRS Form 982, which you can get from the IRS website. This form is used to reduce the tax attributes related to the debt relief. You may only have to fill out a portion of the form depending on the type of debt that is discharged. If you have questions, a tax specialist can address your specific situation.
- File your taxes as usual and include a completed copy of Form 982 as well as a copy of any Form 1099-C from your creditors.
- Keep copies of all your paperwork for your records. If the IRS has additional questions or needs more information, they will inform you by mail.