, Answering FAQ'sTurboTax Employee
Where do I enter Form 1099-C information on canceled debt?
If you received a Form 1099-C Cancellation of Debt regarding your credit card or car loan, your lender has decided to "forgive" your debt.
While you do not need to repay it, you must report the canceled debt on your income tax return. It is generally counted as taxable income.
Follow the steps below to enter the information.
How to enter your 1099-C cancelled debt
Here's how to enter a cancelled debt in TurboTax:
- Select Federal Taxes (Personal in the Home & Business edition).
In Online TurboTax, click the bars at the upper left corner to show Federal Taxes on the selection list; enlarge the screen if needed to show the left side selection list.
- Select Wages & Income, and in the new screen, click Explore on My Own.
- Scroll down the Your Income Summary screen until you see the Less Common Income group.
- Click on the Start/Update button next to the Miscellaneous Income,1099-A, 1099-C category.
- Follow the prompts.
Note: If you have two or more types of 1099-C canceled debt (such as a mortgage and a car loan), TurboTax does not support that tax situation. Please consult a tax professional, we can connect you with a CPA experienced with this situation using TurboTax CPA Select.
If your canceled debt was for non-personal debt, such as for a business, rental property or a farm, your debt situation is probably complex. Also you might not have to pay taxes on this forgiven income if you are insolvent. Under these circumstances, visit a tax professional to learn what's best for you.
If your 1099-C was for mortgage debt on your main residence, the tax rules are different than for other kinds of canceled debt, refer to 1099-C Cancellation of Mortgage Debt.
- Reporting Canceled Mortgage Debt
- Form 1099-C, Cancellation of Debt
- Canceled Debt, Is It Taxable or Not?
- Form 1099-A, Acquisition or Abandonment of Secured Property
- Form 982, Reduction of Tax Attributes
- How does bankruptcy effect my taxes?