Form 1099-C Cancellation of Debt for the 2023 Tax Year

Updated on October 16, 2023 - 10:30 AM by Admin, TaxBandits

The 1099-C is a part of the 1099 Series of forms. This series of IRS tax forms is used to report a variety of different non-payroll payments. When it comes to the Form 1099-C, there are specific filing requirements. Keep reading for a thorough overview of the Form 1099-C.

In this Article, we’ll explore the following information about Form 1099-C.

1. What is Form 1099-C?

Form 1099-C also known as Cancellation of Debt is an IRS tax form used to report debts of over $600 that were forgiven or canceled during the tax year. This form is issued by creditors to report the debt amount cancelled for the debtors.

2. Who is required to file Form 1099-C?

This form is filed by financial institutions, lenders specifically. Lenders must provide the owner of the cancelled debt with a copy of Form 1099-C, this will help them report the cancelled debt as income on their own personal income tax returns form 1040 or 1040-SR. Lenders must also file a 1099-C copy with the IRS to provide them with a record of this information.

3. What are the Copies Available for 1099-C?

There are three copies of Form 1099-C:

  • Copy A goes to the IRS
  • Copy B goes to the debt holder
  • Copy C is kept for the creditor’s records

4. Who needs a copy of Form 1099-C?

If you are a taxpayer who has had a debt either cancelled or forgiven in the course of the past tax year, you should receive a copy from your lender. This copy will provide you with the information, mainly the amount of debt cancelled, that you will need to report on your tax return. With the exception of a few types of debt, this amount should be reported to the IRS as income. Keep reading to learn more about the exclusions. If you don’t receive a Form 1099-C for a cancelled debt that you are aware of, you should contact your lender directly.

5. When is the 1099-C Deadline?

The deadlines to file Form 1099-C, Cancellation of Debt is mentioned below.

Recipient Copy deadline Deadline to E-file with
the IRS
Deadline to file paper copies
with the IRS

January 31, 2024

April 1, 2024

February 28, 2024

Get Started Today with TaxBandits to File Form 1099-C before the deadline to avoid late filing penalties. E-File Now!

6. Are there any Exceptions to the Cancellation of Debt?

Yes, there are a few types of cancelled debt that are not taxable. In this case the cancelled debt would not be included as your income for the tax year. Some of these exclusions are:

  • Bankruptcy or insolvency
  • Non-recourse loans
  • Loan forgiveness due to public service
  • Some debts related to farms
  • Student loan forgiveness
  • Death or disability of a student loan holder

7. What if you file your taxes before receiving Form 1099-C?

If the cancellation of the debt is related to one of the exemptions above, most likely this is not a problem, as this debt wasn’t taxable to begin with. If the cancelled debt is taxable, you need to file an amendment Form 982.

8. How to e-file Form 1099-C with TaxBandits?

E-filing is the easiest and most convenient way to file Form 1099-C. With all the time-saving features from TaxBandits, you can file in minutes. Just follow these simple steps:

  • Step 1: Create an account with TaxBandits.
  • Step 2: Select or add the business you are filing for
  • Step 3: Enter the required Form 1099-C details
  • Step 4: Review and transmit Form 1099-C

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