Fill out Form 1099-C (Cancellation of Debt) online
Form 1099-C reports the cancellation of a debt of $600 or more by a financial institution, credit union, federal agency, or other applicable entity. Cancelled debt is generally treated as taxable income to the debtor unless a specific exclusion applies.
How to fill out Form 1099-C (Cancellation of Debt)
Enter creditor and debtor information
Fill in the creditor's name, address, phone, and TIN. Enter the debtor's name, address, and TIN.
Report the cancellation details
Enter the date of the identifiable event (cancellation) in Box 1. Enter the amount of debt cancelled in Box 2. Enter any interest included in Box 2 in Box 3.
Describe the debt
Enter a description of the debt origin in Box 4 (e.g., student loan, credit card, mortgage). Check Box 5 if the debtor was personally liable for the debt. Enter the identifiable event code in Box 6.
Report fair market value and file
If property was involved, enter the fair market value in Box 7. File Copy A with the IRS and provide Copy B to the debtor by the applicable deadlines.
About Form 1099-C (Cancellation of Debt)
Who needs this form
Lenders and creditors who cancel or forgive a debt of $600 or more must file this form. Debtors receive a copy and must report the cancelled amount as income on their tax return unless they qualify for an exclusion such as bankruptcy, insolvency, or qualified principal residence indebtedness.
Where to submit
Creditors file Copy A with the IRS by the applicable IRS filing deadline for the filing year. Provide Copy B to the debtor by the deadline listed in the latest official instructions.
Source and content freshness
- Reviewed: 2026-02-24
- Filing deadlines may shift for weekends and holidays. Verify due dates with official instructions.
Common mistakes to avoid
- Not reporting cancelled debt as income when no exclusion applies
- Forgetting to file Form 982 to claim an exclusion for bankruptcy or insolvency
- Confusing a debt settlement with a payment, leading to unexpected 1099-C income
- Not checking whether the qualified principal residence indebtedness exclusion applies to a mortgage forgiveness
Frequently asked questions
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Can I avoid paying taxes on cancelled debt?
In certain situations, yes. The IRS provides exclusions for cancelled debt if you were in bankruptcy at the time of cancellation, if you were insolvent (your debts exceeded your assets), or if the debt was qualified principal residence indebtedness (subject to limits and expiration). To claim an exclusion, you must file Form 982 with your tax return.
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