Significance

• In most instances, if you have a debt and your debtor forgives that debt, then it is treated as income by the Internal Revenue Service, or IRS.
  
  

Filing

• The total amount of your debt will included on the Form 1099-C, and that amount should be included on your Form 1040 as income.
  
  

Considerations

• If the inclusion of the debt to your income causes you a financial hardship, contact the Taxpayer Advocate Service at 877-777-4778 (TTY/TDD 800-829-4059).
  
  

Exclusion

• In bankruptcies and some other cases of insolvency, the cancellation of debt is not treated as income.
  
  

Dispute

• If you disagree with your Form 1099-C, contact your lender and ask it to send you a corrected version. Good record keeping can aid you in disputing your 1099-C.