The scoop on 1099C Cancellation of Debt
You may not have to pay taxes for income reported on the 1099-C if you qualify for the insolvency exclusion.
The IRS treats canceled debt as income, but has made provisions for an insolvency exclusion. Most cases of canceled debt involves taxpayers who are struggling to make ends meet. Make sure to look into the exclusion so you don’t pay unnecessary income tax.
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