IRS Form 1099-C Explained with Form 982 for Cancelled Debts

2023 Update: • Form 1099-C & Form 982...
IRS Form 1099-C is filed when a creditor forgives debts owed by the debtor. Under U.S. tax rules, the dollar value of canceled debt is included in gross income under IRC Section 61.
Under certain circumstances, however, a taxpayer may be able to exclude the amount of canceled debts from their income using IRS Form 982.
In this example, we have a taxpayer with forgiven credit card debts. The taxpayer is claiming the insolvency exclusion to not include a portion of the canceled debts in their taxable income.
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