A taxpayer must include any discharged debt appearing on the 1099-C form when filing the general 1040 tax form. The amount of discharged debt should appear on line 21 of the 1040, which has the label "Other income."
How to Include 1099-C Information
Taxpayers receive a 1099-C form when a debt collector has excused at least $600 of debt. The taxpayer must report the amount of debt forgiven when reporting annual federal taxes on the 1040 form for individuals. Line 21 has the space for other income, and the filer should include the amount of debt forgiven on that line. Debt forgiveness should be reported even if it was below the $600 minimum that triggers a 1099-C form. Exceptions exist in cases of bankruptcy and insolvency. The Internal Revenue Service details the exceptions in Publication 4681.
- Internal Revenue Service: 1099-C Form- Cancellation of Debt
- Internal Revenue Service: 1040 Form - U.S. Individual Income Tax Return
- Internal Revenue Service: Instructions for Forms 1099-A and 1099-C
- Internal Revenue Service: Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments