If a Federal Government agency, financial institution, or credit union cancels or forgives a debt you owe of $600 or more, you will receive a Form 1099-C Cancellation of Debt. The amount of the canceled debt is shown in Box 2. Generally, if a debt you owe is canceled or forgiven, other than as a gift or bequest, you must include the canceled amount in your income.

If the debt is a nonbusiness debt, report the canceled amount on Schedule 1 (Form 1040) Additional Income and Adjustments to Income, Line 8; if it is a business debt, report the amount on the appropriate business form. The TaxAct program will do this for you after you enter the information from Form 1099-C.

To report Form 1099-C in the TaxAct^® program:

1. From within your TaxAct return (Online or Desktop), click Federal (on smaller devices, click in the top left corner of your screen, then click Federal).
2. Click the Other Income dropdown, then click Cancellation of Debt (Form 1099-C).
3. Click + Add Form 1099-C to create a new copy of the form or click Edit to edit a form already created (desktop program: click Review instead of Edit).
4. Continue with the interview process to enter your information.

The TaxAct program computes the canceled debt income for you. If you can exclude the amount of canceled debt from your gross income based on IRS Publication 4681, go to our Form 982 - Reduction of Tax Attributes FAQ.

Related Links

• Instructions for Form 1099-C
• Publication 544 Sales and Other Dispositions of Assets
• Publication 334 Tax Guide for Small Business
• Publication 525 Taxable and Nontaxable Income
• Do I have cancellation of debt income on my personal residence? IRS Interactive Assistant

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the webpage or document at the time it is accessed.