IRS Form 1099-C

What Is Form 1099-C?

Form 1099-C (Cancellation of Debt) is one of a series of "1099" forms used by the Internal Revenue Service (IRS) to report various payments and transactions, excluding employee wages. Lenders and creditors must send a 1099-C to the IRS and to borrowers if $600 or more in debt was canceled or forgiven. In most cases canceled debt counts as income. If you receive Form 1099-C, you must report the amount on your income tax return on the "Other income" line of your Form 1040 or 1040-SR. Note that you must include the canceled debt in your income even if it’s less than $600 and you don’t receive Form 1099-C.

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Who Needs Form 1099-C?

If you borrowed money from a commercial lender and at least $600 of that debt was canceled or forgiven, you should receive Form 1099-C from the lender (the IRS also receives a copy). Common reasons lenders send 1099-C forms include foreclosure, repossession, the return of property to a lender, abandonment of property, loan modification on a principal residence, and resolving a credit card debt. If you receive a 1099-C, make sure the information is correct. If not, contact the lender and request a corrected form.

What Is Form 1099-C Used For?

Form 1099-C is used to report a canceled or forgiven debt of $600 or more. The lender submits the form to the IRS and the borrower, who uses the form to report the canceled debt on his or her income tax return. For example, assume you borrow $10,000 and default on the loan after repaying $4,000. If the lender can’t collect the remaining debt from you, said lender may cancel the debt—$6,000, in this example. That amount is reported on Form 1099-C and, in general, is taxable income to you. According to the IRS, there are situations when income from a canceled debt may not be taxable, including: 1. Bankruptcy 2. Insolvency 3. Certain farm debts 4. Non-recourse loans In addition, certain types of mortgage debt may be excluded from taxes. The Mortgage Forgiveness Debt Relief Act of 2007 (extended through 2020) allows individuals to exclude up to $2 million of certain mortgage debt canceled by a lender if it involves a foreclosure, short sale, or the restructuring of a mortgage with a lower principal amount on a primary residence. After downloading the free Form 1099-C template, if you need to fill in it or modify the content on your Mac, you may need a powerful PDF editor for Mac. Using PDF Reader Pro, you can add your own details and use this template design for your own needs, edit the PDF more conveniently. Download the form and fill it out using PDF Reader Pro. Click the button "free download" to download the app.