Q: I received a letter, which is a copy of a 1099-C. I’m not sure how to report this or what it is.
A: If a debt that you owe is canceled or forgiven, other than as a gift or bequest, you include the canceled amount in your income. Assuming that the debt was a non-business debt, you report the canceled amount on Form 1040, line 21. The amount to report is shown on the Form 1099-C in box 2.
These questions are actual inquiries submitted by taxpayers to our AARP Tax-Aide Program. The AARP Tax-Aide Program is a volunteer-run, free tax-preparation and assistance program offered to low- and middle-income taxpayers with special attention to those age 60 and older. Our volunteers are trained and IRS-certified to understand individual federal-tax issues. Our volunteers provide tax assistance as a public service and cannot guarantee the accuracy of the information provided.
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