This post has been closed and is not open for comments or answers.

1099-C Cancellation of Debt

This cancellation of debt was for dental work done.  Why can't I claim this in medical expenses?  Do I have to claim this as Income?  If so, please explain.
    Typically, when you receive a form 1099-C for cancellation of a debt, it means that you did not actually pay for the amount you owed.  The amount cancelled on a form 1099-C is included as ordinary income for the year you receive the form 1099-C.

    There are a couple of exceptions.  One of those is if it is an expense that would normally be deductible to you.  In your case, medical expenses are deductible.    This can get tricky though...and, we would need more details to be accurate.   If the debt is an actual loan and it is cancelled, then it is true "cancelled debt".  If the dental office sent you the 1099-C for normal uncollected medical bills, then that form was sent incorrectly.
    • Thank you for your response.  Your comment is circling the wagons & we're close.  This amount was on a credit card for dental work done afew years ago.  Some of our debts (this one) was turned over to an agency to "manage" our bills (credit cards).    In the interim, I'd never do this again, as they charge too much for "maintenance fees" each month.  However, the credit card companies renegociated but wanted their money.  In turn, we had to take a loan out on a 401K to fulfill that!  The GE credit card was used for dental expenses (and some vet bills)...regardless, the amount they want is money that I'VE paid out to start with.  I hope that makes sense.  :-)  The money claimed on the 1099-C Cancellation of Debt is NOT money I received.  GE sent me a 1099C in the amount of two thousand nine hundred seven dollars and thirty-nine cents ($2,907.39).  This is a doozie!!
    It sounds like quite a bit was going on.  The bottom line, if I am understanding correctly, is that it is cancelled credit card debt.   It is not money you receive, but the credit card company essentially "loaned"  you money.  And, then they cancelled it (or at least part of it) ...through was sounds like a balance reduction.  Am I understanding that correctly?    If so, it is income to you.

    What do you mean when you say "the amount they want is money that I'VE paid out to start with. " ?