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

SOLVEDby TurboTax737Updated June 16, 2023

Yes. 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.

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