If you recently received a 1099c in the mail from a creditor, you may be wondering if you will have to pay taxes on the amount listed.

Often, creditors will report the amount of a debt forgiven to the IRS. The IRS considers forgiven or canceled debt as income. This may happen to you after resolving a credit card debt or if you have a debt that has been charged off or forgiven by the creditor. If this is the case, you may receive a 1099-C “cancellation of debt” notice. This most usually happens when your creditor and you make a settlement for at least $600 less than the original balance. In this scenario, the creditor is required by law to file the cancellation of debt notice with the IRS.

If you receive this form, don’t panic! It may not affect you. It is hard to determine whether you will be affected by this or not without discussing it with a certified tax professional. For example, you may be insolvent. This simply means that the amount of debt owed is more than the total of your income and wealth. Consult a tax professional to find out how settling debts may affect you.

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What People Have to Say

I just wanted to thank your entire staff at The Law Offices of Leslie H. Tayne, for helping me get out of debt. If it wasn’t for your firm, I would have never been able to resolve my $13k worth of debt in less than 3 years. Your staff did a great job, I was finally able to buy myself a brand new car without using a cosigner. I can’t tell you again how happy I am. I would recommend your services to anyone.

L.C. Client 2007-2009

I sleep like a baby at night now because of the work that you and your office have done. Rest assured that I will refer anyone I know to your office with conditions that are similarly circumstanced.

R.S. Client 2012-2014

You have been very helpful at first directing me in the right direction when I had no clue how to go about handling everything, I really appreciated all your advice and help and hope we can work something out. Thanks again for all your help and kind words, and patience.

D.M. Client 2009-2012