Who needs the 1099-C form?
According to the IRS, any debt you owe that is cancelled, forgiven or discharged, counts as taxable income. Form 1099-C informs the IRS about a debt that has been cancelled or wiped out in bankruptcy. A creditor or money lender has to file this form to inform about the cancellation of debt of more than $600 to a debtor and the IRS.
What is the purpose of the 1099-C form?
The main purpose of the Cancelled Debt form is to report the IRS that the creditor has cancelled a certain debt(s) of the taxpayer. Starting with this very moment the taxpayer has to include this amount to his individual income tax return form.
What other documents must accompany the 1099-C form?
The Cancelled Debt form must be filed together with 1096 form and form 1099-A (if applicable). The taxpayer may have to attach other forms on request.
When is the 1099-C form due?
The completed Copy B should be forwarded to the debtor by the 31st of January, 2017. Copy A is to be filed with the IRS by the 28th of February, 2017 or 31st of March, 2017 in case of e-filing.
What information should be provided in the 1099-C form?
The creditor has to indicate the name of the creditor and the debtor, TIN (Taxpayer Identification Number), Federal identification Number, address, and date of the cancellation. The document must describe the debt, list the total of the amount forgiven and provide a reasonable market value of the property in case real estate is involved.
What do I do with the form after its completion?
The completed form is filed with the local IRS office and is sent to the debtor for their further records.