Question by Diddle: Do I have to file this 1099-C (cancellation of debt)?
I settled a debt with a credit card company. I owed them a certain amount but they offered me a settlement deal so that I could pay them less than what was fully owed and the debt would be “paid as agreed for lesser amount owed” is how they put it. Now I get a 1099-C with the remainder of the amount on it (what is left after I paid the deal…example. Say I owed 00 and they offered to let me pay just 0 to settle the debt and cancel the card. Then they send me a 1099-C. The 1099-C shows a cancellation of debt for 00). Do I have to claim that on my taxes? I’m trying to use the Taxslayer free tax software. I doesn’t support 1099-C forms so I don’t know where I would even claim this anyway.
Best answer:
Answer by Vangorn2000
Yes, you do have to report cancelled debt. According to the IRS, any amount of cancelled debt is considered regular income. So just add the 00 as “additional income” and compute your tax amount from that.
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