1099-C Form
What Is Form 1099-C?
Form 1099-C is a tax document issued by a lender when a debt of $600 or more is cancelled or forgiven. The form reports the amount of cancelled debt to both the borrower and the Internal Revenue Service (IRS).
The cancelled amount may be treated as taxable income.
Why It Matters
Form 1099-C alerts taxpayers that a lender has reported cancelled debt to the IRS. The reported amount may need to be included on the taxpayer’s tax return.
Failing to report cancelled debt can lead to tax discrepancies or penalties.
How Form 1099-C Works
When a lender forgives qualifying debt, they issue Form 1099-C.
The form typically includes:
- the amount of cancelled debt
- the creditor’s information
- the date of cancellation
Taxpayers use this information when filing their tax returns.
Example
A bank forgiving $2,000 of unpaid credit card debt may send the borrower Form 1099-C to report the cancellation.
1099-C vs 1099-INT
- Form 1099-C reports cancelled debt.
- Form 1099-INT reports interest income.
FAQs About Form 1099-C
Who receives Form 1099-C?
Borrowers whose lenders cancel qualifying debts.
Is cancelled debt always taxable?
Not always. Certain exclusions may apply.
What should taxpayers do after receiving the form?
Include the information when preparing a tax return.
Related Terms
