IRS Form 1099-C, Cancellation of Debt

About IRS Form 1099-C

Form 1099-C is an information return that lenders and certain other creditors file when they cancel or forgive a debt. Canceled debt can be treated as taxable income to the borrower, so the form helps the IRS and the taxpayer account for it.

The form reports details such as the date the debt was canceled, the amount of debt discharged, any interest included, and a description of the debt. It may also indicate whether the borrower was personally liable for the debt.

Not all canceled debt is taxable. Exclusions may apply for bankruptcy, insolvency, certain student loans, and other situations. Taxpayers often use Form 982 to report excluded amounts, so follow the official instructions to determine the correct treatment.

Who needs to complete it

• Borrowers who had a debt canceled or forgiven by a lender.
• Banks, credit unions, and other financial institutions that discharge debt.
• Taxpayers determining whether canceled debt is taxable income.
• People claiming an exclusion such as insolvency or bankruptcy.

How to fill out IRS Form 1099-C

1. 1Enter the creditor (payer) name, address, and taxpayer identification number.
2. 2Enter the debtor's name, address, and taxpayer identification number.
3. 3Enter the date the debt was identified as canceled.
4. 4Report the amount of debt discharged.
5. 5Report any interest included in the discharged amount, if applicable.
6. 6Provide a description of the origin of the debt, such as a credit card or loan.
7. 7Indicate whether the debtor was personally liable for repayment.
8. 8Follow the official line-by-line instructions to complete remaining boxes before filing.