Do I have to file this 1099-C (cancellation of debt)?

I settled a debt with a credit card company. I owed them a certain amount but they offered me a settlement deal so that I could pay them less than what was fully owed and the debt would be %26quot;paid as agreed for lesser amount owed%26quot; is how they put it. Now I get a 1099-C with the remainder of the amount on it (what is left after I paid the deal...example. Say I owed $2000 and they offered to let me pay just $800 to settle the debt and cancel the card. Then they send me a 1099-C. The 1099-C shows a cancellation of debt for $1200). Do I have to claim that on my taxes? I%26#039;m trying to use the Taxslayer free tax software. I doesn%26#039;t support 1099-C forms so I don%26#039;t know where I would even claim this anyway.

Do I have to file this 1099-C (cancellation of debt)?

This is referred to as phantom debt. Basically, banks are generally evil, and the IRS wants its cut of the money. You should list this as %26quot;other income%26quot; with a note to see your 1099-C. You cannot postpone this under the bankruptcy/insolvency rules. A court has to give you this status after being granted a bankruptcy.

Do I have to file this 1099-C (cancellation of debt)?

Yes, you do have to report cancelled debt. According to the IRS, any amount of cancelled debt is considered regular income. So just add the $1200 as %26quot;additional income%26quot; and compute your tax amount from that.

Do I have to file this 1099-C (cancellation of debt)?

It goes on line 21 of the 1040 as %26quot;other income%26quot;.

There are some postpone options if you are bankrupt or insolvent.