Yes, if you have a 1099-C you must declare income from the forgiveness of debt. A
cancellation of debt is considered taxable income to the extent of the debt
that you were forgiven. Generally, your lender will issue you a 1099-C
showing the taxable amount you should report on your return.
To
enter your 1099-C,
- In your Federal Return, choose
the tab for Wages & Income
- Scroll down to the
topic Less Common Income. (You may have to click Add more income and See a list to find it.)
- Scroll to the very
last item Miscellaneous Income, 1099-A, 1099-C and
choose Start/Edit
- This will open the
screen for Miscellaneous Income. Scroll down again to Cancellation
of debt (Form 1099-C) or the abandonment and/or acquisition of secured
property (Form 1099-A) and Start/Edit
- The first screen
says Tell us about your canceled debt.
- Choose the second radio button "I received 1099-C for another type of debt..." and Continue to complete
the interview.