IRS Form 1099-C is used to report Cancellation of Debt (COD). Lenders file this form to notify both the borrower and the IRS when a debt of $600 or more has been canceled or forgiven.
For borrowers, this is important because the discharged debt is generally treated as taxable income and must be reported on the “Other Income” line of their tax return—even if it’s less than $600.
The top section of Form 1099-C asks for the creditor’s name, address, and TIN, followed by the debtor’s name, address, and TIN.
How to Fill Out IRS Form 1099-C (Box by Box)
The form contains seven key boxes, each serving a different reporting purpose:
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Account Number
A unique number the creditor uses to identify the borrower. -
Box 1: Date of Identifiable Event
Enter the date when the debt was canceled. This could be due to bankruptcy, foreclosure, statute of limitations, or another identifiable event. -
Box 2: Amount of Debt Discharged
Report the total amount of canceled debt. Borrowers must include this amount as income on their tax return. -
Box 3: Interest Included
If the discharged debt included interest, report it here. -
Box 4: Debt or Property Description
Provide details about the canceled debt or the property securing it. -
Box 5: Borrower Liability
Indicate whether the borrower was personally liable for the debt at the time of cancellation. -
Box 6: Identifiable Event Code
Use the appropriate code to explain why the debt was canceled:-
A: Bankruptcy
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B: Other judicial debt relief
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C: Statute of limitations/deficiency expiration
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D: Foreclosure election
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E: Debt relief from probate or similar proceeding
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F: By agreement
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G: Decision/policy to discontinue collection
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H: Expiration of nonpayment testing period
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I: Other discharge before identifiable event
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Box 7: Fair Market Value of Property
Report the fair market value of any property connected to the canceled debt.
Filing Deadlines for Form 1099-C
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Copy B must be sent to the borrower by January 31.
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Copy A must be filed with the IRS by February 28 (paper filing) or March 31 (e-file).
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Copy C is kept by the creditor for records.
To simplify compliance, many filers choose to electronically file IRS Form 1099-C using approved software.
Key Takeaways
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Creditors must issue Form 1099-C when $600 or more of debt is canceled.
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Borrowers must report canceled debt as taxable income.
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Each box on the form provides critical details for IRS reporting.
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Filing deadlines differ depending on whether you paper file or e-file.
1099-C Filing Solutions
Simplify your IRS Form 1099-C cancellation of debt reporting with our secure, reliable solutions. Use our easy-to-navigate software to e-file on your own, or outsource the entire project to our expert team. We’ll help you save time, reduce administrative costs, and ensure compliance with confidence.
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