What you need to know about the IRS 1099-C Form: Canceled Debt.

TLDR;

• Many so-called “Experts” claim you fill out the 1099C to get rid of debt, loans & credit cards when you submit to the IRS.

• The 1099C Form is sent to you by lenders when the lenders have forgiven or written off the debt that you owed.

• Generally, the amount of Canceled Debt on IRS Form 1099C is taxable income to you.

• You can apply exclusions to the Income on the IRS Form 1099C, which is applied through your tax return.

• If you do not include the 1099C amounts in your tax return, the IRS will make an adjustment through an Automated Under Reporting (CP2000 Notice)

Can I file the 1099-C with the IRS to get rid of my personal debt with Loans & Credit Cards?

There are many videos on Tiktok that have these “Experts” claiming that submitting the 1099C Cancelation of debt Income will get rid of all of your debt. They boldly claim to walk into the bank, applying for a loan, receiving the funds with the IRS Form 1099C already mailed out to the IRS so that the funds they will get will be automatically wiped away.

You know the saying if something is too good to be true… Well, in this case, the claims are absolutely false.

What is the 1099-C Cancellation of Debt Income?

The IRS Form 1099C is sent to you by lenders when they have forgiven, discharged, or written off a debt that you owe. The 1099C is commonly used by:

• Mortgages when your home is foreclosed

• Car Repossessed by Lender

• Timeshare Loans Written off

• Credit Card Debt Discharged by Bank

There are exclusions to the 1099C Debt Cancellation Income

One of the exclusions is the insolvency exclusion. Insolvency is the financial position where your Income & Assets is less than your Expenses & Net value of assets.

In other words, when you are financially upside down. I am providing an insolvency worksheet that can evaluate whether you are insolvent & if possibly can exclude the 1099C income from your tax return.

IRS Form 1099-C FAQs

Conclusion.

When it comes to tax advice, the best is to review source law & get sound advice from a qualified tax professional. Blindly following some tips you see on Tiktok, Youtube or any other social media should only be followed up by research from the law before applying any strategy.