What is a 1099-C Form and Why Did I Get It?

You may have recently received a 1099-C form in the mail and have been wondering what it is and why you got it.

A 1099-C form is issued by a lender when you have canceled a debt of $600 or more.

The form is used to report the canceled debt to the IRS so that they can tax you on it.

What is a 1099-C Form?

A 1099-C form, also known as a “cancellation of debt” form, is issued by a lender when you have canceled debt of $600 or more. The form is used to report the canceled debt to the IRS so that they can tax you on it.

The amount of money that you owe on the debt may be less than $600, but if the lender cancels all or part of the debt, the entire amount is reported on the 1099-C form. For example, if you owe $1,000 on a credit card and the lender cancels $500 of the debt, the lender will issue a 1099-C form for the entire $1,000.

 

Why Did I Get a 1099-C Form?

You may have received a 1099-C form because you settled your debt for less than what you originally owed. For example, if you owed $10,000 on a credit card and settled with the lender for $5,000, you would receive a 1099-C form for the remaining $5,000.

Another reason why you may have received a 1099-C form is that your lender charged off your debt. This means that your lender has written off your debt as a loss because they do not believe that you will ever pay it back.

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If your lender charged off your debt within the past few years, you may still be liable for paying taxes on the debt. This is because there is a statute of limitations on how long lenders have to collect debts before they are written off as losses. The statute of limitations varies from state to state, but it is usually between three and seven years.

Receiving a 1099-C form can be confusing and stressful, but it is important to understand what it means and what your options are. If you have any questions about your 1099-C form or how to deal with canceled debt, please contact our office for help.

 

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Note: The information on this website is for general purposes only and does not constitute financial or legal advice.

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