How do you fill out an insolvency form?


Quick Answer

To fill out a form to determine insolvency, access Form 982 and Publication 4681 from the IRS website, and add all appropriate information regarding your forgiven debts and from the 1099-C form received from the creditor that forgave the debt. Enter all requested information in the Publication 4681 worksheet, parts one and two, as per The Law Dictionary instructions.

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Full Answer

The idea of the Form 982 insolvency form is to determine the amount of discharged indebtedness that you can exclude from your gross income, according to the IRS website. Note that your annual income is not considered in insolvency, and there is no requirement to provide this information. To submit Form 982, attach it to your federal income tax return. Find box 1a on your federal income tax return, and check it.

The Publication 4681 worksheet determines whether you are insolvent. List all of your debts in part one, including any cancelled debts and debts not forgiven, according to The Law Dictionary. List all of your assets in part two, including the value of any cars and real estate owned, any bank account balances, and any 401k or retirement accounts. To complete this worksheet, subtract the total of all assets from the total of all debts, where you are not insolvent if the total is zero or a negative number.

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