What to Expect with Cancelled Debt

If a creditor discharged $600 or more of debt and you received a Form 1099-C, you may be required to report the debt discharge as income on your tax return. Ironically, this can result in a hefty tax bill. Fortunately there are a few exceptions that apply. While there is no general “hardship rule,” if you can show that some of these exceptions apply, you may not have to pay tax on all or part of the amount.

Common Exceptions to COD Income Taxes

**If you qualify for any of the following exceptions, fill in and attach IRS Form 982 Reduction of Tax Attribu