I did not anticipate this form because i was in a post monitoring for 2 more years. I am very concerned as to how this will effect my health care tax credit when I file my tax return. I have looked all over this site and could not find an answer.
Certain cancelled debt from a 1099-C can be excluded from Gross Income. Such is the case with canceled student debt, so it shouldn't affect your MAGI for tax credits.
It's worth noting, student loan interest can be deducted from MAGI to qualify for tax credits. Generally if you claim a higher income then you projected on your application then you claim you could end up owing back some tax credits on the Premium Tax Credit form 8962. Since student loan debt cancellation is an exception to this rule. Here are other exceptions.
Debt Cancellations or Reductions that Qualify for EXCEPTION to Inclusion in Gross Income:
- Amounts specifically excluded from income by law such as gifts, bequests, devises or inheritances
- Cancellation of certain qualified student loans
- Canceled debt, that if it were paid by a cash basis taxpayer, would be deductible
- A qualified purchase price reduction given by a seller
- Any Pay-for-Performance Success Payments that reduce the principal balance of your home mortgage under the Home Affordable Modification Program
Canceled Debt that Qualifies for EXCLUSION from Gross Income:
- Debt canceled in a Title 11 bankruptcy case
- Debt canceled during insolvency
- Cancellation of qualified farm indebtedness
- Cancellation of qualified real property business indebtedness
- Cancellation of qualified principal residence indebtedness
Read more on how a 1099-C canceled debt works from the IRS.
NOTE: We are a free information site, so this shouldn't be taken as legal advice. You can always contact HealthCare.Gov or IRS.Gov or a tax professional for assistance.