What information is contained on Form 1099-C?
Menu Path: Income > Uncommon Income > Canceled Debt (1099-C)
Form 1099-C is used to report cancellation of debt income. However, many people don't need to report the 1099-C amounts as income. Amounts reported on 1099-C may be excluded from your income if the debts were canceled because of bankruptcy or insolvency. Insolvency is when your debts exceed your assets at the time the debt was canceled.
Another exclusion is for qualified mortgage debt forgiveness. The Mortgage Forgiveness Debt Relief Act of 2007 allows individuals to exclude from income any discharges of qualified principal residence indebtedness.
Qualified principal residence indebtedness is a mortgage you took out to buy, build, or substantially improve your principal residence. Any debt secured by your principal residence that you use to refinance qualified principal residence indebtedness also qualifies. Basically, if the mortgage debt is for your home or home improvements then it qualifies, but any part of the mortgage debt that was used to pay for vacations or cars or other personal spending doesn't qualify. However, if you were insolvent or bankrupt at the time of your mortgage foreclosure, the personal part of the mortgage debt would also be eligible to be excluded from income under the normal bankruptcy or insolvency rules.
If needed, enter your 1099-C information on the Canceled Debt (1099-C) Information screen.
Form 1099-C is used to report cancellation of debt income. However, many people don't need to report the 1099-C amounts as income. Amounts reported on 1099-C may be excluded from your income if the debts were canceled because of bankruptcy or insolvency. Insolvency is when your debts exceed your assets at the time the debt was canceled.
Another exclusion is for qualified mortgage debt forgiveness. The Mortgage Forgiveness Debt Relief Act of 2007 allows individuals to exclude from income any discharges of qualified principal residence indebtedness.
Qualified principal residence indebtedness is a mortgage you took out to buy, build, or substantially improve your principal residence. Any debt secured by your principal residence that you use to refinance qualified principal residence indebtedness also qualifies. Basically, if the mortgage debt is for your home or home improvements then it qualifies, but any part of the mortgage debt that was used to pay for vacations or cars or other personal spending doesn't qualify. However, if you were insolvent or bankrupt at the time of your mortgage foreclosure, the personal part of the mortgage debt would also be eligible to be excluded from income under the normal bankruptcy or insolvency rules.
If needed, enter your 1099-C information on the Canceled Debt (1099-C) Information screen.
