IRS Form 1099-C Explained: Cancellation of Debt (Instructions & Printable PDF)

IRS Form 1099-C Explained – If you’ve had debt forgiven or canceled, you might receive IRS Form 1099-C in the mail. This form reports canceled debt to the IRS, and it could impact your taxes. In this guide, we’ll break down what Form 1099-C is, when it’s issued, how it affects your tax return, and provide step-by-step instructions along with a link to a printable PDF. Whether you’re dealing with credit card debt forgiveness, mortgage modifications, or student loan discharges, understanding this form is crucial for accurate tax filing in 2026.

What is IRS Form 1099-C?

IRS Form 1099-C, titled “Cancellation of Debt,” is an information return used to report the cancellation or forgiveness of debt amounting to $600 or more. It’s issued by lenders or creditors when they cancel a debt you owe, treating the forgiven amount as potential taxable income to you. Common scenarios include debt settlements, foreclosures, repossessions, or loan modifications where part of the balance is wiped out.

For example, if a credit card company settles your $5,000 balance for $2,000, they might issue a 1099-C for the $3,000 forgiven. The form ensures the IRS knows about this “income,” even though you didn’t receive cash.

Here’s a sample of what IRS Form 1099-C looks like:

When Do You Receive a 1099-C Form?

Creditors must issue Form 1099-C if they cancel $600 or more of debt and an “identifiable event” occurs. Identifiable events include:

  • Bankruptcy discharge (Code A)
  • Cancellation through court proceedings or receivership (Code B)
  • Expiration of the statute of limitations for collection (Code C)
  • Foreclosure or similar remedies that prevent collection (Code D)
  • Probate proceedings (Code E)
  • Agreement to cancel for less than full payment (Code F)
  • Creditor’s decision to discontinue collection (Code G)
  • Other actual discharges before an identifiable event (Code H)

You should receive your copy by January 31 of the year following the cancellation. For tax year 2025 (filed in 2026), this means forms for 2025 cancellations arrive by January 31, 2026. If you don’t receive one but believe you should, contact the creditor—the debt might not qualify as canceled if they’re still pursuing collection.

Is Canceled Debt Taxable Income?

In most cases, yes—the canceled amount is treated as ordinary income and must be reported on your tax return. For instance, if $10,000 of debt is forgiven, you could owe taxes on that $10,000 as if it were earnings. This applies to various debts like credit cards, mortgages, auto loans, and student loans.

However, not all canceled debt is taxable. Check for exceptions below to see if you qualify for exclusions.

Exceptions to Reporting Canceled Debt as Income

The IRS provides several exclusions where forgiven debt isn’t taxed:

  • Bankruptcy: Debt discharged in a Title 11 bankruptcy case.
  • Insolvency: If your liabilities exceeded assets immediately before cancellation (use IRS Form 982 to claim).
  • Qualified Principal Residence Indebtedness: For mortgage debt forgiven on your main home (up to $750,000 for single filers; note: this relief expires December 31, 2025).
  • Qualified Farm or Real Property Business Indebtedness: Specific business-related debts.
  • Student Loan Forgiveness: Certain discharges due to death, disability, or public service (extended through January 1, 2026 for some loans).
  • Non-Recourse Loans: If the loan wasn’t personally guaranteed.
  • Gifts or Bequests: Debt forgiven as a gift.

If an exception applies, file Form 982 with your return to exclude the amount. Always consult a tax professional for your situation.

How to Report Form 1099-C on Your Tax Return?

As a recipient, you don’t file Form 1099-C—that’s the creditor’s job. Instead:

  1. Review Box 2 for the canceled amount.
  2. Report it on Form 1040, Schedule 1, Line 8c (Other Income) as “canceled debt” or similar.
  3. If eligible for exclusion, attach Form 982 and reduce tax attributes like basis in assets.
  4. Include any interest from Box 3 in taxable interest if not already in Box 2.

For joint debts, each spouse may receive a form; allocate accordingly. Use tax software like TurboTax to import the info easily.

Instructions for Filing IRS Form 1099-C (For Creditors)

While most readers are recipients, creditors must follow these IRS instructions to file Form 1099-C:

Who Must File?

  • Financial institutions, credit unions, federal agencies, or businesses where lending is a significant activity.
  • File for each debtor with $600+ canceled debt tied to an identifiable event.

Filing Deadlines

  • Furnish to debtor: By January 31.
  • File with IRS: February 28 (paper) or March 31 (electronic) of the year following cancellation.

How to Complete the Boxes?

  • Box 1: Date of identifiable event.
  • Box 2: Canceled debt amount (principal only; exclude penalties/fees).
  • Box 3: Interest included in Box 2 (optional).
  • Box 4: Debt description (e.g., “credit card debt”).
  • Box 5: Check if debtor was personally liable.
  • Box 6: Event code (A-H).
  • Box 7: FMV of property (if related to foreclosure).

Use electronic filing if submitting 10+ returns (threshold as of 2024). Truncate TINs on debtor copies for privacy.

Exceptions for Creditors

  • No filing for interest-only, fraudulent debts, foreign debtors under certain conditions, or student loans discharged for death/disability through 2025.

For full details, refer to IRS Publication 4681.

Printable PDF of IRS Form 1099-C

You can download the printable PDF of Form 1099-C directly from the IRS website. The latest version (as of February 2026) is available at https://www.irs.gov/pub/irs-pdf/f1099c.pdf. This is the fillable form for creditors; recipients use it for reference only.

For instructions, download the PDF at https://www.irs.gov/pub/irs-pdf/i1099ac.pdf.

Final Thoughts on 1099-C and Canceled Debt

Receiving a 1099-C doesn’t always mean a big tax bill—exceptions like insolvency can help. Stay proactive by reviewing your form early and seeking advice if needed. For the most current info, visit IRS.gov, as rules can change (e.g., student loan relief ends in 2026). Proper reporting ensures compliance and avoids penalties.

Disclaimer: This article is for informational purposes only and not tax advice. Consult a qualified tax professional for personalized guidance.