When Do You Need to Fill Out a 1099-C Form for Your Taxes?

When Do You Need to Fill Out a 1099-C Form for Your Taxes?

A 1099-C form is needed for taxes when the taxpayer settles a debt for at least $600 less than what the original amount owed was, says Credit Info Center. The Internal Revenue Service considers cancelled debt as income because the taxpayer received money that he never returned, says Intuit.

The IRS says any debt a taxpayer owes that is cancelled, discharged or forgiven becomes taxable income to the taxpayer, and therefore a 1099-C form is issued to advise the IRS of the income, explains Intuit. Common needs for a 1099-C include foreclosure, repossession, abandonment of property and the modification of a loan on the taxpayer's residence.