What is Form 1099-C?
Form 1099-C, Cancellation of Debt, is an informational return form used to report the user’s "Cancellation of Debt," from the lender that forgave, cancel, or discharge the debt. According to the IRS, any debt owed by the filer that may have been canceled, forgiven, or discharged becomes taxable income.
Common types are:
- The return of property to a lender
- Abandonment of property
- The modification of a loan on your principal residence
- Resolving a credit card debt
The user does not have to file Form 1099-C when there has been a fraudulent debt and has been canceled due to identity theft. The canceled income is used as other income on Form 1040 (or Form 1040-SR). The Issuer will send the taxpayers a Form 1099-C by January 31.
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