California 2011: Cancellation of Debt on Principal Residence
California taxpayers may be eligible to avoid paying federal and state tax on cancelled debt from their principal residence.
Certain customers, who did not pay federal tax on cancelled debt from their principal residence, may have filed an incorrect California tax return.
TurboTax has fixed this issue.
How to tell if you may be impacted
You may be affected if ALL of the following are true:
- You filed your 2011 California tax return before March 14, 2012 AND
- You received a federal Form 1099-C for cancelled debt on your personal residence AND
- You had the words “Section 121 Exclusion” on your California Schedule D (540), Line 1a, Column (a) Description of Property AND
- You had EQUAL amounts on the “Section 121 Exclusion” line of your California Schedule D (540), Line 1a, Column (c) Cost or other basis and line 1a, Column (d) Loss.
If you are affected, your may have underpaid your California tax. You may need to amend your California tax return.
You can make the corrections yourself.
- To do it yourself, please follow these step-by-step instructions.
- After you make the changes to your tax return, you will need to mail a copy of your amended state return.
- Your printed return will include instructions on how and where to mail it.
- If you need assistance, call us at the phone number in the email.
Or let us do the work for you.
- Please download and print this Authorization Form.
- Complete the form and fax it to us at the number printed at the top of the form.
- A TurboTax representative will contact you (within 15 days) when your corrected return is ready to be securely emailed back to you.
- You can print, sign, and mail the corrected return to the state taxing authority.
If you need to contact us, please use the phone number in the email from TurboTax and tell the representative you’re calling about the California 2011: Cancelled Debt.