A lender issues Form 1099-C when a debt is canceled. If you received a Form 1099-C because a debt that you owed has been canceled you might need to include this amount as income on your return.
Income from cancellation of debt is not taxed if any of the following conditions apply:
- The cancellation is intended as a gift
- The debt is qualified farm debt
- The debt is qualified real property business debt
- You are insolvent or bankrupt
- The debt is qualified principal residence indebtedness
In TurboTax, you will need to do the following:
- Federal Taxes
- Wages & Income
- Less Common Income
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Miscellaneous Income, 1099-A, 1099-C, please click Start
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Cancellation of debt (Form 1099-C) or the abandonment and/or acquisition of secured property (Form 1099-A), please Start
