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How Can I Get My 1099-C Reported in the Correct Year?

Written by Steve Rhode

Question:

Dear Steve,

I had a joint auto loan from 2015, my ex was the only person to ever use the car. Divorced in 2016.

Her car her responsibility in divorce we agreed. She didn’t pay, Car repossessed in 2018. Settled Dec 2019/Jan 2020. I sent the payment in December but they didn’t process until 2020.

They said I would get a 1099c in 2021- is there any way to force them to move it back to 2020?

I could amend if so.

If not, and I had zero usage or responsibility for the vehicle will I still have to get a 1099c?

Any way to convince them not to? If they insist but I want to claim 0% usage do I still have to submit the form? I got remarried and don’t want to file this jointly with my wife if possible.

Thanks.

Jay

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Answer:

Dear Jay,

There are a number of factors here that can impact your situation.

First, since this was a joint debt, both you and your ex-wife should have received a 1099-C but you may be filing separate returns. You don’t have to take the hit for the full amount or maybe none of the forgiven debt. I suggest you read the advice in this post. If your ex-wife agrees you did not use the car, you might be able to show your use of the asset was 0%.

If you feel the 1099 reporting date is incorrect, you can ask to have the 1099 corrected. The process to do so is below. Hopefully, you have some proof they received the payment before the end of the year. But even if they processed the payment in January of 2020 the 1099-C should be issued for the tax year 2020 and not 2021, even though you would receive it in 2021.

Form 1099 Correction Process

  • Call the IRS and have an IRS representative initiate a Form 1099 complaint. The IRS will fill out form 4598, “Form W-2, 1098, or 1099 Not Received, Incorrect or Lost”
  • A letter will be sent to the entity initiating the 1099 and request that they furnish a corrected Form 1099 to the taxpayer within ten days. The letter advises the entity of their responsibilities to provide a corrected Form 1099 and of the penalties for failure to do so.
  • The taxpayer will be sent a letter that provides instructions and a copy of the Form 4598, “Form W-2, 1098, or 1099 Not Received, Incorrect or Lost.” The Form 4598 may be used in the event that the payer does not provide you with the corrected Form 1099 in time to file your tax return.
  • Attach the Form 4598 to the tax return. Be prepared to support the change to the Form 1099 with substantiation that proves the adjusted amounts. – Source
READ  My Wife Was Issued a 1099-C By American Express for Her Sister's Debt

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Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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