Where is cancellation of debt income reported

See Publication , Bankruptcy Tax Guide, for information on taxable items under bankruptcy. Learn more. What do I need to know? The amount of canceled debt is included in your income unless an exception or exclusion applies. This concept is explained in detail in What should I do?

I filed for bankruptcy. What happens to debt amounts then? Read More. For Individuals Download. Want more C tax guidance? Or help with other forms? You owe a balance to the IRS. The IRS has not received your tax return so they have proposed taxes due. Learn what the IRS is looking for during an audit, the steps you should take to prepare for an IRS audit, and when it's best to get expert help.

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Tax information center : IRS : Forms. What is a C? Who files a C? The debt was discharged in bankruptcy. Form C shows the amount of canceled or forgiven debt that was reported to the IRS.

If you and another person were jointly and severally liable for a canceled debt, each of you may get a Form C showing the entire amount of the canceled debt. Give the office a call if you have any questions regarding joint liability of canceled debt. If you receive a Form C and the information is incorrect, contact the lender to make corrections. If you receive a Form C, don't ignore it. You may not have to report that entire amount shown on Form C as income.

The amount, if any, you must report depends on all the facts and circumstances. Generally, however, unless you meet one of the exceptions or exclusions discussed below, you must report any taxable canceled debt reported on Form C as ordinary income on:.

If you've had debt forgiven or canceled this year and receive a Form C, you might qualify for an exception or exclusion. If your canceled debt meets the requirements for an exception or exclusion, then you don't need to report your canceled debt on your tax return.

Under the federal tax code, there are five exceptions and four exclusions for tax year Here are the five most commonly used:. Note: The Mortgage Debt Relief Act of , which applied to debt forgiven in calendar years through , allowed taxpayers to exclude income from the discharge of debt on their principal residence. As of this writing, Congress has yet to reauthorize the Act for calendar year Amounts specifically excluded from income by law such as gifts, bequests, devises or inheritances.