Excellent.
Thank you all so much for the help! I kept thinking of the 1099-C as separate from their social security income and therefore would be taxable. I did not realize that there was a specific threshold, gross income plus 50% of combined (filing jointly) social security benefits that needed to be met for any portion of the income to be considered taxable.
Even if my grandmother filed independently, she would not hit the $25,000 threshold, including the $12000 in gross income from the 1099-C.
