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Will I pay tax on a debt that was cancelled and reported on a 1099-C? |
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Taxpayers who received a 1099-C during the tax year from a creditor may have to include the amount that is listed in Box 2 and Box 3 of the form as income on their tax return. The cancellation of debt income will be reported as ordinary income, which will result in taxes at your applicable tax level. It is important to note, that even if you did not receive a 1099-C from a creditor, you are still required to report the amount on your income tax return as income. In certain circumstances, a taxpayer may be able to exclude the cancelled debt from their income. |
