IRS Form 1099-C: A Complete 2026 Guide

What is Form 1099-C?

Form 1099-C, Cancellation of Debt, is an IRS information return that financial institutions, government agencies, and lending businesses file to report debt they have canceled or forgiven. It is required under Internal Revenue Code section 6050P.

Canceled debt is generally taxable income to the debtor, so the IRS uses Form 1099-C to match what creditors forgive against what debtors report. Common situations include:

Credit card balances settled for less than the full amount
Mortgage debt forgiven in a short sale, foreclosure, or loan modification
Personal, auto, and business loans written off after collection stops
Student loans discharged outside an exclusion
Debts extinguished in a receivership, probate, or similar proceeding

What counts as a debt?

A debt is any amount owed to you, including principal, interest, fees, penalties, administrative costs, and fines. For a lending transaction, such as a loan, revolving credit, or line of credit, you only need to report the stated principal.

Who must file Form 1099-C?

You must file Form 1099-C if you cancel a debt of $600 or more and you are one of the following:

A financial institution, such as a bank, trust company, or savings and loan association
A credit union
The FDIC, NCUA, U.S. Postal Service, a military department, or another federal executive agency, including their successors and subunits
A subsidiary of a financial institution or credit union that is subject to federal or state regulatory supervision
A federal government agency, including a court or an instrumentality in the judicial or legislative branch
Any organization whose significant trade or business is lending money, such as a finance company or credit card company

Safe harbors for lending businesses: An organization is not treated as having a significant lending business if its gross income from lending is below both 15% of gross income and $5 million (with no prior-year reporting), or below both 10% and $3 million for each of the 3 most recent test years (with prior-year reporting). Newly formed organizations generally qualify too.

Seller financing: Businesses whose main trade is selling nonfinancial goods or services are not treated as lenders for credit extended to their own customers, unless a separate financing subsidiary extends the credit.

Multiple creditors: Each creditor files if its share of the canceled debt is $600 or more. A lead bank or fund administrator can file on the creditors’ behalf.

You must file Form 1099-C whether or not the debtor has to report the canceled amount as income. Exclusions such as insolvency or bankruptcy are the debtor’s to claim on their own return.
The debtor can be an individual, corporation, partnership, trust, estate, association, or company.
Do not file Form 1099-C when fraudulent debt is canceled due to identity theft. The form is only for debts the debtor actually incurred.

What is the Form 1099-C reporting threshold?

The threshold is $600 or more of canceled debt per debtor. Do not combine separate cancellations of the same debt to reach $600, unless they are part of a plan to avoid reporting.

The $600 threshold for Form 1099-C was not changed by the One Big Beautiful Bill Act (OBBBA). The OBBBA increase to $2,000 applies to Forms 1099-NEC and 1099-MISC.

When is a debt considered canceled?

A debt is treated as canceled when an identifiable event occurs, and you report it with a code in Box 6:

Code	Identifiable event
A	Discharge in bankruptcy under Title 11
B	Cancellation in a receivership, foreclosure, or similar court proceeding
C	Expiration of the statute of limitations, upheld in a final court judgment
D	Foreclosure election that bars the creditor from collecting
E	Debt made unenforceable in probate or a similar proceeding
F	Agreement to cancel the debt for less than full payment, such as a short sale
G	Creditor’s decision or defined policy to stop collection and cancel the debt
H	Other actual discharge before an identifiable event

If you cancel a debt before an identifiable event, you can choose to report it for the year of cancellation using code H. No further reporting is needed if a later event occurs.

Which canceled debts are exempt from 1099-C reporting?

You are not required to file Form 1099-C for:

Bankruptcy discharges of personal debt. Report only if your records show the debt was incurred for business or investment purposes.
Interest and nonprincipal amounts in lending transactions. If you include interest in Box 2, show it separately in Box 3.
Related-party deemed cancellations, unless the transfer was made to avoid reporting.
Release of one debtor, as long as the remaining debtors stay liable for the full unpaid amount.
Guarantors and sureties.
Debts canceled by a foreign branch for a foreign debtor, when specific conditions are met.
Pass-through securitized arrangements and REMICs, until further guidance.
Nonlending transactions and debts forgiven under the debt’s own terms, until further guidance.

What’s new on Form 1099-C for the 2026 tax year?

There are no major changes to Form 1099-C for the 2026 tax year.

The FIRE e-file system retires December 31, 2026, and IRIS becomes the required filing system afterward. See how TaxBandits helps with the IRIS transition

What are the copies of Form 1099-C?

Copy	Purpose
Copy A	Filed with the IRS
Copy B	Given to the debtor for their tax records
Copy C	Retained by the creditor for their records

What information is required to file Form 1099-C?

Creditor’s name, TIN, address, and a central telephone number
Debtor’s name, TIN, and address
Account number, required if you file more than one Form 1099-C for the same debtor
Date of the identifiable event (Box 1)
Amount of debt discharged (Box 2) and any interest included (Box 3)
Debt description (Box 4)
Personal liability checkbox (Box 5)
Identifiable event code (Box 6)
Fair market value of property, if applicable (Box 7)

Learn more about box-by-box entries in our Form 1099-C Instructions guide.

When is the deadline to file Form 1099-C?

File Form 1099-C for the year after the calendar year in which the identifiable event occurred. For 2026 events (filed in 2027):

Copy	Deadline
Debtor copy	February 1, 2027
Paper filing with the IRS	March 1, 2027
Electronic filing with the IRS	March 31, 2027

See our Form 1099-C Due Date guide for state-specific deadlines.

Can I get an extension to file Form 1099-C?

Yes. Unlike Form 1099-NEC and Form W-2, Form 1099-C qualifies for an automatic 30-day extension.

File Form 8809 electronically or by paper on or before the original due date to receive it. A separate request, Form 15397, can be filed if you need more time to furnish debtor copies.

Are there penalties for late filing of Form 1099-C?

Filed	Penalty per form
Within 30 days of the deadline	$60
After 30 days, before August 1	$130
After August 1, or not filed	$340
Intentional disregard	$680, no maximum

Form 1099-C vs. Form 1099-A

	Form 1099-C	Form 1099-A
What it reports	Debt that was canceled or forgiven	Acquisition or abandonment of property that secures a loan
Trigger	An identifiable event, with $600 or more canceled	Lender acquires the property or learns it was abandoned
Who files	Financial institutions, credit unions, federal agencies, and lending businesses	Anyone who lends money in a trade or business, secured by property
Key amounts	Amount discharged, interest, and FMV of property	Principal outstanding and FMV of property

In a foreclosure where the lender also forgives the remaining balance in the same year, filing Form 1099-C alone covers both requirements, as long as Boxes 4, 5, and 7 are completed.

Form 1099-S is different again. It reports gross proceeds from a real estate sale and is filed by the closing agent, not the lender. Foreclosures are not reported on Form 1099-S.

Common Form 1099-C filing mistakes to avoid

Filing for identity-theft debt. Do not file Form 1099-C when you cancel fraudulent debt the debtor never incurred.
Skipping the form because the debt isn’t taxable. You must file regardless of whether the debtor can exclude the amount.
Reporting more than was actually canceled. Box 2 cannot exceed the total debt minus amounts received through a settlement, foreclosure sale, or short sale.
Including interest without Box 3. If interest is included in Box 2, it must also be shown separately in Box 3.
Using the wrong event code. Box 6 must match the identifiable event, such as F for a settlement for less than full payment or G for a policy to stop collection.
Combining separate cancellations to hit $600. Each cancellation is tested on its own unless the split is designed to avoid reporting.
Carrying over 2021 to 2025 student loan suppression. For discharges after 2025, most student loan forgiveness outside death or disability may be reportable.
Leaving out the central phone number. The creditor box must include a number where the debtor can reach the right department.

How to file Form 1099-C for the 2026 tax year

You can file Form 1099-C electronically or on paper, though the IRS strongly recommends e-filing. If you file 10 or more information returns in total, you are required to e-file.

To e-file with TaxBandits:

Step 1: Create a free account.
Step 2: Select or add the business you're filing for.
Step 3: Enter the required Form 1099-C details, including the amount discharged, event code, and any property FMV.
Step 4: Review and transmit your return to the IRS and applicable states.

E-File Form 1099-C Now, starting as low as $0.80/form.

Frequently asked questions

$600 or more of canceled debt per debtor.

Financial institutions, credit unions, federal government agencies, and organizations whose significant business is lending money.

No, if the cancellation and the foreclosure or abandonment happen in the same year. File Form 1099-C and complete Boxes 4, 5, and 7.

No. If you choose to include interest in Box 2, report it separately in Box 3.

Only when filing on paper. Form 1096 is not required for e-filing.

File a corrected Form 1099-C as soon as the error is identified. You don’t need to correct a form just because the debtor later pays on a prior-year debt.

If your debtor has questions about their 1099-C

Debtors often contact the creditor once their copy arrives, especially after a settlement or short sale. Clear answers reduce correction requests and support calls during filing season.

Not always. Canceled debt is generally taxable, but exclusions can apply, such as insolvency or bankruptcy. The debtor claims these on Form 982. IRS Pub. 4681 explains the rules.

Box 2 shows the amount canceled, which is the debt minus what was paid in the settlement. If interest is included, it appears separately in Box 3.

Only if it was discharged because of the student’s death or total and permanent disability, and the student has an SSN. Most other student loan forgiveness after 2025 may be taxable.

The debtor should contact the creditor at the phone number on the form. Debts incurred through identity theft should not be reported on Form 1099-C.