Reporting Your 1099-C Canceled Debt for Credit Cards, Car Loans

If you received a Form 1099-C Cancellation of Debt regarding your credit card or car loan, your lender has decided to "forgive" your debt.

While you do not need to repay it, you must report the canceled debt on your income tax return. It is generally counted as taxable income.

Follow the steps below to enter the information.

For TurboTax Online:

1. Select the Tools icon in the upper right-hand portion of the screen.
2. Select Topics Search.
3. When the window opens, type "1099-c" into the box.
4. You'll see the words "1099-c cancellation of debt."
5. Select Go.
6. Follow the on-screen instructions to enter the information from your 1099-C.

Note: If you have two or more types of 1099-C canceled debt (such as a mortgage and a car loan), TurboTax does not support that tax situation.

Please consult a professional, or see IRS publications 544 and 4681 before continuing.

For TurboTax Desktop:

1. Enter your cursor into the search box in the upper right-hand portion of the screen.
2. Type "1099-c" into the search box and click Find.
3. Follow the on-screen instructions to enter the information from your 1099-C.

Note: If you have two or more types of 1099-C canceled debt (such as a mortgage and a car loan), TurboTax does not support that tax situation.

Please consult a professional, or see IRS Publication 544 Sales and Other Disposition of Assets and IRS Publication 4681 Canceled Debts, Foreclosures, Repossessions and Abandonments before continuing.

If your canceled debt was for non-personal debt, such as for a business, rental property or a farm, your debt situation is probably complex. Also you might not have to pay taxes on this forgiven income if you are insolvent. Under these circumstances, visit a tax professional to learn what's best for you.

If your 1099-C was for mortgage debt on your main residence, the tax rules are different than for other kinds of canceled debt.

For information see 1099-C Cancellation of Mortgage Debt.