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Form 982 TurboTax | How To File It & General Instructions

Form 982 TurboTax is used to reduce your tax basis or costs. Form 982 is named Reduction of Tax Attributes Due to Discharge of Indebtedness. It is used to report the canceled debt amount to exclude it from taxable income. You can use the TurboTax Deluxe or a higher edition to file IRS form 982.


In short, form 982 is also used to determine the amount of discharged indebtedness. You can also exclude it from gross income under certain circumstances. TurboTax automatically generates IRS form 982 on your account if one of your creditors has canceled your debts and sends you the IRS form 1099-C.

Form 982 TurboTax- Requirements For Automatic Generation

TurboTax automatically generates the IRS form 982 if:

  • Cancellation of mortgage debt relief
  • Debt canceled due to bankruptcy
  • Debt Canceled due to insolvency
  • Cancellation of real property indebtedness
  • Cancellation of the qualified farm.

Steps To Get The Form 982 TurboTax

Here are the methods to get the form 982 on TurboTax:

IRS Form 982 On TurboTax Desktop

You can access the IRS form 982 on TurboTax by following these instructions-

  • Firstly, launch the QuickBooks desktop program
  • Secondly, login to your QuickBooks account
  • After that, switch to Forms Mode
  • Then, open your returns
  • After that, select the Forms icon on the top right corner
  • Then, choose the Forms option from the View tab
  • You will get the list of all available blogs on the left panel of the screen
  • After that, click on the Open Forms tab and tap the Search icon
  • Finally, type form 982 in the text field and press the Enter

Read More:- Error 65535 TurboTax: An Ultimate Guide To Fix It

IRS Form 982 On TurboTax Online

Follow the step-by-step process to get the easiest way to get the IRS form 982 on TurboTax:

  • Firstly, complete the TurboTax Online process
  • Secondly, click on the Take me to my return option
  • Navigate to the Return page on your left-hand side
  • After that, go to the TurboTax online screen
  • Then, click on the Tax Tools option
  • Select the Tools option from the opened window
  • After that, choose the Topic Search option from the Tools menu
  • Then, enter form 982 in the search field and press the Enter key
  • Tap the IRS form 982 from the search result and click Go to proceed
  • Finally, follow on-screen prompts and finalize the process.

Form 982 TurboTax Online- Cancelled Debt Exceptions

Here are the exceptions related to your canceled debt:

  • Gifts
  • The bequest included in a will
  • Cancellation of student debt loan
  • The mortgage balance is reduced due to the Home Affordable Modification Program.

Form 982 TurboTax Online- Deductible Debt Exception

These payments may be deductible on your return:

  • Use Schedule C if you are a business owner
  • Incur business expenses on credit
  • Use the cash method of accounting
  • Do not report it on your tax return
  • Increase your taxable net profit.

Form 982 TurboTax Online – Cancelled Debt Exclusions

Here are some essential exclusions:

  • Debts canceled on your primary residence
  • Bankruptcy
  • At the time of debt cancellation, you are insolvent.

Form 982 TurboTax- General Instructions

TurboTax form 982 instructions are given here. You also need to go through all the instructions given below:

IRS Form 982 on TurboTax- Purpose Of Form

File form 982 to the reduction of tax attributes. Suppose you fill out this form because of discharged indebtedness on a personal loan.

Form 982 TurboTax- Line 1b

Insolvency exclusions do not apply to discharge in a minor 11 cases: your assets’ FMV or Fair Market Value immediately before the discharge. Taxpayers should also calculate insolvency by using the worksheet.

Form 982 TurboTax- Line 1c

You should be regularly and actively engaged in the money lending process. A qualified person might be an individual, local, state, federal government, or organization. You can not exclude the total amount of your tax attributes. All the excess is also included in the income.

IRS Form 982 On TurboTax- Line 1d

Qualified real property business indebtedness is:

  • Real property used in business
  • Secured by real property
  • It does not apply if considering a corporation.

You can not exclude excess of the outstanding principal amount over FMV. All the quantity is also included in the income.

Form 982 TurboTax- Line 1e

Any one of the following requirements should apply:

  • The debt was discharged before 2026
  • Discharged subject to an arrangement
  • Evidence in writing.

You can follow the insolvency rules by checking the box. Fill out the following details:

  • Principal Residence
  • Qualified Principal Residence Indebtedness
  • The amount eligible for the exclusion
  • Ordering rule.

Form 982 TurboTax- Line 2

Enter your gross income in the box and do not enter more than the limit. The exact amount will not be equal to the total basis reduction. Specific ownership changes are also for a particular rule.

IRS Form 982 On TurboTax- Line 3

You can treat all real property for sale to customers. Business or trade is also a depreciable property. Tick the checkbox to make an election.

Form 982 TurboTax- Part 2

Part 2 includes these important sections:

  • Line 7
  • Line 10a
  • Basis Reduction
  • Line 10b.

Apply all parts of the debt amount to reduce the depreciable property. See specific section 1017 for the basis reduction. You need to attach a statement describing the transactions from your banks. Complete lines 5 to 13 to reduce your attributes.

IRS Form 982 On TurboTax Online- Part 3

Part 3 of the form 982 TurboTax includes Adjustment to basis and Paperwork reduction act notice. You must attach a request for general rule variation. It must consist of the used method and amount allocation. You can also use the paperwork reduction act notice to give us the information.

Form 982 will display a valid OMB control number. Generally, tax returns and information may become the admin of any Internal Revenue Law.


The article includes automatic form 982 TurboTax generation requirements, general instructions, steps to get the form 982 on TurboTax, Deductible debt exceptions, Cancelled debt exclusions, and Cancelled debt exceptions.

If you face any issues, we recommend you hire accounting professionals. Wire-it Solutions offers advanced accounting services and software support. Individuals or business organizations seek professionals with experience in tax preparation and tax filing.

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