Do I need to report canceled debt from a credit card or car loan?

Canceled debt, often accomplished with the help of credit counselors and debt settlement agencies, needs to be reported.

Your lender will send you a 1099-C form, which includes the amount of canceled debt. Simply enter your 1099-C to report it on your return.

Although canceled debt often counts as taxable income, that's not always the case. Exceptions include bankruptcy and canceled mortgage debt. When you enter your 1099-C, we'll ask follow-up questions to determine if it's taxable or not.