Form 1099-C: Cancellation of Debt
Report cancellation of debt of $600 or more to the IRS and the debtor.
Filing Deadline
January 31 (to debtor) / February 28 (paper) or March 31 (e-file) to IRS
Threshold Amount
$600 or more in canceled debt
Taxable Income
Canceled debt is generally taxable to the debtor
Overview
Form 1099-C is used by creditors to report the cancellation of a debt of $600 or more. Canceled debt is generally considered taxable income to the debtor, though exceptions exist.
This form must be filed when an identifiable event occurs, such as bankruptcy discharge, expiration of the statute of limitations, foreclosure, or when the creditor stops collection activities.
Who Must File
Required Filers
- •Financial institutions (banks, credit unions, savings associations)
- •Credit card companies and other creditors
- •Government agencies that cancel debts of $600 or more
- •Anyone who cancels a debt of $600 or more owed by another party
Exceptions & Notes
- ✕Debts canceled in bankruptcy proceedings (report but debtor may exclude)
- ✕Student loans canceled due to death or disability (different reporting)
- ✕Qualified principal residence indebtedness may be excludable by debtor
Form Structure & Instructions
Here's what information is required in each section:
Debt Information
Details about the canceled debt
Property and Liability Information
Information if secured property was involved
Important Filing Notes
36-Month Rule
If no identifiable event occurs, file Form 1099-C after 36 months of inactivity on the account (no payments received and no significant collection activity).
Identifiable Events
Common identifiable events include: bankruptcy discharge, foreclosure, cancellation in agreement, statute of limitations expiration, or creditor's decision to stop collection.
Foreclosure Reporting
If property is foreclosed, you may need both Form 1099-A and 1099-C. You can combine the information on a single 1099-C if debt is also canceled.
Debtor May Exclude Income
The debtor may be able to exclude the canceled debt from income if they are insolvent, in bankruptcy, or other exceptions apply. You must still file the form.
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