Do I need to add a 1099-C form to my income taxes?

B

brokenbouldermgr

New Member
I was about to hit send on my taxes when I remembered this email.

Do I really need to add this to my taxes? I filed myself using TurboTax and it never asked about a 1099-C form.

The letter says:
Hey! Congrats on paying off debt last year—nice job!

Here's a heads up for tax season: if you saved $600+ on a settlement, you might get a 1099-C form from your creditor. You might need to report those savings as income on your taxes.

Btw, you might be able to skip paying txes on it if you were insolvent (liabilities > assets). Just hit up a tax pro to figure it out.

For more deets, check out the IRS website or this video.
 
I'm unsure, but I'm considering a Capital One credit card. They notified me it might be reported to the IRS as income. I plan to file in person with H&R Block this year to discuss it with a professional.
 
Sure thing. Here's the deal: if they write off an amount, the IRS will see it as income for you, and yeah, you'll owe taxes on that amount.
 
Yes, if a creditor writes off part of your balance, it is considered income and must be reported. Failing to report it can result in a bill from the IRS, including penalties and interest. It’s more cost effective to include it in your filing now.
 
If you settle a debt for less than what you owed and it's $600 or more, you need to report it. For example, if you had a $2000 debt and settled it for $800, you'd report $1200. If you settled it for $1401, you wouldn't need to report the $599 difference.
 
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