1099-MISC received -- should it have been a 1099-C?

[FortHoodTX]

Kind of an odd situation due to my profession. I am an insurance agent. My Chapter 7 discharge date was 01/18/2014.

Of all my creditors, I've received one 1099-C so far (from a credit card company.) Entered it into TurboTax along with Form 982 appropriately to claim discharge due to bankruptcy. Cool, done.

Now I get a 1099-MISC from an insurance company I used to write business for. I had an agent debit balance around $3000 (money I had received as income on the promise that my clients would pay it back via their monthly premiums. A lot of those contracts fell through, so *I* was responsible for paying it back. I paid back around $2200 before I filed for Chapter 7 protection. (As an insurance agent, this money is not necessarily reported to the IRS as income on the year it's earned.)

So now I get a 1099-MISC in the mail with the remaining $800 reported as income. On one hand... I guess it is considered income. I was paid this money years ago. I was then required to pay it BACK to the insurance company, but filed BK. However, Chapter 7 prevented me from being obligated to repay this income back to them. So they're just writing off the $800 anyway.

Am I responsible for paying taxes on that $800 now? Or should I have been absolved of all responsibility to this balance the day I filed BK?

Sorry it sounds so convoluted... I promise it isn't. I just expected to get a 1099-C, not a 1099-MISC.

[LadyInTheRed]

You did not receive $800 in income from them in 2014, right? I would contact the insurance company and tell them that, if anything, they should be issuing a 1099-C, not a 1099-Misc. They really shouldn't be issuing even a 1099-C for forgiven debt that has been discharged. But, as you know, that is easy to deal with.

[FortHoodTX]

You did not receive $800 in income from them in 2014, right? I would contact the insurance company and tell them that, if anything, they should be issuing a 1099-C, not a 1099-Misc. They really shouldn't be issuing even a 1099-C for forgiven debt that has been discharged. But, as you know, that is easy to deal with.

I agree. Just want to have my ducks in a row before I tell them they've used the wrong form. The $800 was income, but I earned it in 2011 or so. Again, as an insurance agent, all my income consists of advances... on the promise that my clients will pay it back. The income is reported to the IRS on the back-end when it's "realized" (since I earn residual commissions too) rather than the front-end as most commission-based jobs. Some clients' contracts fell through, that balance of $3000 falls back on me, the agent, since it's income I was advanced that the insurance company didn't recover.

It seems they're just finally reporting it as income as a finality since they know they're not getting it back (neither from me nor my clients.) Though I'm under no obligation to repay it anymore, I still have to pay taxes on it. I think that's probably the logic behind the 1099-MISC.

I just thought that when that debit balance was discharged in the BK, I'd never have to associate with it again in any way.