Taxpayers receive a 1099-C form when a debt collector has excused at least $600 of debt. The taxpayer must report the amount of debt forgiven when reporting annual federal taxes on the 1040 form for individuals. Line 21 has the space for other income, and the filer should include the amount of debt forgiven on that line. Debt forgiveness should be reported even if it was below the $600 minimum that triggers a 1099-C form. Exceptions exist in cases of bankruptcy and insolvency. The Internal Revenue Service details the exceptions in Publication 4681.
