Has anyone ever receive a 1099-c tax form for a consumer debt from a creditor?

Can a creditor send regular people an IRS Form 1099-C: Cancellation of Debt if it is a consumer debt and what for? Do people usually get these things in the mail from credit card and cell phone companies?





It claims the debts are supposed to be income because a person didn't pay and they wrote it off.

Has anyone ever receive a 1099-c tax form for a consumer debt from a creditor?
Yep- she's right. I had settled a consumer card for half of what I owed and I got one of those forms to file with my taxes this year. It basically states that you saved this much money, that technically you owed, so therefore it's considered income. You have to pay taxes on the amount you saved. I feel bad for people that go through debt settlement companies- you know? I don't think a lot of them realize that even though they are saving money right then- in the long run they are still somewhat responsible for it. Hope this answered your question hun- Good Luck!
Reply:Regular people do get them. I have not personally gotten one, but I have done a lot of reading up on this and say for instance you have a credit card bill of $3,000, and your collection agency says you only have to pay us $1000 to settle your debt, you pay this amount, then you will receive in the mail (by Jan. 31) a 1099-c tax form. You will be responsible for the $2000 in "extra income".
Reply:You bet. I got one several years ago.


The IRS website clearly explains that a creditor must file a 1099C w/the IRS and send a copy to the debtor if the "forgiven" amount is $600 or more.


The debtor must claim this amount as "other income" on their tax return. The IRS considers it a "gain", as you would have otherwise used that money to pay the bill.