Infographic: What to Do if You Get a 1099-C

If you defaulted on a debt, negotiated a reduced pay-off with your lender, or lost a home or other property due to foreclosure or repossession, you may have received a Form 1099-C Cancellation of Debt in the mail. Since the IRS expects you to include in your gross income any forgiven debtโ€”and pay taxes on it (unless you qualify for an exclusion or exception)โ€”this is a form that requires your careful attention.

If you have received one of these forms, youโ€™re not alone. The IRS projects that it will process 2.8 million 1099-Cs for the 2010 tax year, up from nearly 2.7 million for the 2009 tax year. Thus, this weekโ€™s infographic is dedicated to the Form 1099-C, the new tax-time mascot of the Great Recession.

For more on the Form 1099-C, see Gerri Detweilerโ€™s article, 1099-C In the Mail? How to Avoid Taxes on Canceled Debt.

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