Form 1099-C is a form used by lenders to report canceled debt to the IRS. Canceled debt is often taxable to the recipient, though the tax code contains a number of “outs” that can allow the recipient to avoid taxation. Examples of those outs include when the taxpayer is insolvent, or foreclosures on a taxpayer’s primary residence (usually! This provision of the code sometimes expires and needs re-upped by Congress).

Form 1099-C will report the amount of debt that was canceled, the date of the cancelation, and whether or not the taxpayer was personally liable for the debt.

For further reading on the subject of cancelation of debt and insolvency, check out my post on that.