Updated November 7, 2026. Quick answer: Form 1099-C reports a debt that a creditor canceled, or that an identifiable event treated as canceled, when the debt is $600 or more. Its seven boxes show the event date (1), the amount discharged (2), interest included in it (3), a debt description (4), whether you were personally liable (5), a one-letter event code (6) and the fair market value of any property (7). Receiving the form does not by itself make the amount taxable: an exception or an exclusion may apply, and a taxable nonbusiness amount goes on Schedule 1 (Form 1040), line 8c.
What the debtor’s copy says
Copy B, the debtor’s copy, opens by saying why you got it: “You received this form because a federal government agency or an applicable financial entity (a creditor) has discharged (canceled or forgiven) a debt you owed, or because an identifiable event has occurred that either is or is deemed to be a discharge of a debt of $600 or more.” It then says the amount is not always taxable: “However, you may not have to include all of the canceled debt in your income.” The filer’s side says the same thing from the other direction: “Form 1099-C must be filed regardless of whether the debtor is required to report the debt as income.”
The seven boxes, in the IRS’s words
These are the descriptions printed on Copy B. Box 6 has its own page, the event codes, and box 7 connects to the Form 1099-A boxes that the same foreclosure or abandonment can produce.
| Box | What Copy B says |
|---|---|
| 1 | “Box 1. Shows the date the earliest identifiable event occurred or, at the creditor’s discretion, the date of an actual discharge that occurred before an identifiable event.” |
| 2 | “Box 2. Shows the amount of debt either actually or deemed discharged.” |
| 3 | “Box 3. Shows interest if included in the debt reported in box 2.” |
| 4 | “Box 4. Shows a description of the debt.” |
| 5 | “Box 5. Shows whether you were personally liable for repayment of the debt when the debt was created or, if modified, at the time of the last modification.” |
| 6 | “Box 6. Shows the reason your creditor has filed this form.” |
| 7 | “Box 7. If, in the same calendar year, a foreclosure or abandonment of property occurred in connection with the cancellation of the debt, the fair market value (FMV) of the property will be shown, or you will receive a separate Form 1099-A.” |
If the amount in box 2 looks wrong
Copy B puts the remedy in the box 2 note: “If you don’t agree with the amount, contact your creditor.” Publication 4681 adds what box 2 can contain: “The amount in box 2 will include principal and may include interest and other nonprincipal amounts (such as fees or penalties).” The filer instructions say a creditor reporting a lending transaction is required to report only the stated principal, so a box 2 that is higher or lower than your own records is worth a call to the creditor before it goes on a return.
Where a taxable amount goes on your return
Publication 4681 lists the places a taxable canceled debt is reported, by kind of debt. For a nonbusiness debt it is “Schedule 1 (Form 1040), line 8c, if the debt is a nonbusiness debt” for a nonfarm sole proprietorship it is “Schedule C (Form 1040), line 6, if the debt is related to a nonfarm sole proprietorship”. Rental, farm rental and farm debts have their own lines in the same list. And a missing form does not remove the duty: “Even if you didn’t receive a Form 1099-C, you must report canceled debt as gross income on your tax return unless one of the exceptions or exclusions described later applies.”
Exclusions that can take the amount out of income
Two exclusions have their own pages here. “Debt canceled in a title 11 bankruptcy case isn’t included in your income.” And “Don’t include a canceled debt in income to the extent that you were insolvent immediately before the cancellation.” Either one is reported on Form 982: Part I, lines 1a to 3 covers the boxes and the amount, Part II covers what you give up in exchange, and the insolvency worksheet walks the insolvency calculation line by line.
When the form arrives
For the filer, “File Form 1099-C in the year following the calendar year in which the identifiable event occurs.” A cancellation in 2026 is therefore reported on a form that arrives in early 2027. Copy B also covers a debt that was not yet actually discharged: “If an identifiable event has occurred but the debt has not actually been discharged, then include any discharged debt in your income in the year that it is actually discharged, unless an exception or exclusion applies to you in that year.”
Edition
This page reads Form 1099-C and Form 1099-A (both Rev. April 2025), the Instructions for Forms 1099-A and 1099-C (Rev. April 2025) and Publication 4681 for 2025 returns, all files irs.gov served on November 7, 2026 (sha256 in the kit data). Check the revision printed on your own form before you follow a box reference, and the IRS page for the form for anything enacted after these files were published.
Common mistakes
- Treating the box 2 amount as automatically taxable. Copy B and Publication 4681 both list exceptions and exclusions, and the creditor files regardless of whether you must report it.
- Ignoring a canceled debt because no form arrived. The duty to report does not depend on receiving a 1099-C.
- Assuming box 3 interest is always income. Publication 4681 ties it to whether the interest would have been deductible if you had paid it.
- Reading box 7 as a sale price. It is the fair market value the creditor reports when a foreclosure or abandonment happened in the same year.
Related: Form 1099-A boxes explained, and Publication 544.
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Answer againSources
- Form 1099-C, Cancellation of Debt (Rev. April 2025): https://www.irs.gov/pub/irs-pdf/f1099c.pdf
- Instructions for Forms 1099-A and 1099-C (Rev. April 2025): https://www.irs.gov/pub/irs-pdf/i1099ac.pdf
- Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments (2025 returns): https://www.irs.gov/pub/irs-pdf/p4681.pdf
Read from the IRS documents linked above on November 7, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.