Can you split the 1099-C if filing seperta due to a divorce?

Answer 1

There are some complexities here, but the short answer is maybe (of course, it is never easy when dealing with the IRS).

If the mortgage (or HELOC, Credit Card, Car Loan, etc) was only in one person's name... then the 1099C belongs only with that person. No wiggle room here.

If, however, the note was in both names, and both were responsible, then you could perform a split. You would need to include an explanation with your return that details your ex's Name and SSN, and likewise they should do the same on their return referencing you. This ensures that the whole debt is accounted for, but each of you becomes responsible for your own share - note it doesn't have to be a 50/50 split, but you do need to reach an agreement, otherwise it could come back to haunt you.

A note about cancelled debt - you don't say what type of debt this is, but it is possible it can be excluded entirely by submitting form 982, therefore it does not matter who claims the amount. At a high level - in order for 982 to apply, there would have to be a bankruptcy, insolvency, or the debt must be fully representative of primary residence indebtedness. You should talk with your tax adviser to see if form 982 applies to your situation.