Do you have to claim a 1099-C on your taxes?
Andrew Campbell
Updated on February 05, 2026
In most situations, if you receive a Form 1099-C from a lender after negotiating a debt cancellation with them, you’ll have to report the amount on that form to the Internal Revenue Service as taxable income.
Do you have to file a 1099-C Cancellation of Debt?
Your responsibility to report the taxable amount of canceled debt as income on your tax return for the year when the cancellation occurs doesn’t change whether or not you receive a correct Form 1099-C. You must include this cancellation of debt in your income unless an exception or exclusion, discussed below, applies.
What do you do if you receive a 1099-C after filing taxes?
If you receive a 1099-C after filing taxes and you are insolvent, you probably do not owe any additional taxes on that amount. You must file form 982 along with the amended return to verify this insolvency and show that no tax is due on the income shown on the 1099-C form.
What happens when a 1099-C is issued on old debt?
The most disturbing part of this process is if the creditor had issued you the 1099-C for cancellation of debt, in the year the debt was actually canceled you might not have had to pay any taxes on the forgiven debt if you had been insolvent at the time.
What should I do if I receive a 1099-C?
If the creditor is working under the old rule on a debt that’s 36 months old, you can request that they rescind the 1099-C. Otherwise, you may owe taxes on a balance that was never forgiven. If the creditor doesn’t rescind the tax form, you can file a dispute with the IRS. Getting a 1099-C in the mail may be surprising.
Do you still have to file a 1099-C if you are delinquent?
In this event, the account is still delinquent, but the debt hasn’t been forgiven, so the lender may still try to collect. The IRS amended the rule later that year, so creditors are no longer expected to file a 1099-C just because it’s 36 months past due. But it is possible for it to still happen.
Can a creditor send a 1099c 3 years after?
If the Statute of Limitations actually did expired 3 years ago, they should have sent you a 1099-C for that year, and you would need to pay taxes on it for that year. Which Code is on the 1099-C?
