What to Do If You Receive a 1009-C After Filing Taxes

Lenders will report forgiven debt as income on a Form 1099-C.

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When a lender forgives a debt you owe, it will report the forgiven amount to the Internal Revenue Service as income paid to you using form 1099-C. You must report this income to the IRS for the tax year in which it was received. Do not ignore this form, even if you receive it after you file your taxes for the year. You may not owe any taxes on this amount, but the IRS will be looking for you to include and account for this money, and may penalize you for failing to claim it.

File an Amended Return

Any time your tax information changes after you have filed a tax return, you may file an amended return to correct the information and pay the taxes or collect the refund due. You do this by filing an IRS form 1040X. You must have a copy of the original tax return when filing the amended return, because you will need to record the original filing information on the amended form in one column and write the updated information in another.

Time Frame and Penalties

Since an amended return for a Form 1099-C means you will more than likely end up paying more in taxes, no time limit exists for filing the form. If you are filing the amended return by the due date for the original return, you should not be responsible for interest or penalties for this oversight. After the original due date for the return, you may be assessed these fees.


If you discharged a debt through bankruptcy, you should not receive a Form 1099-C for this debt. If you receive a 1099-C for the discharged debt, contact the lender and let it know. It may send you an updated 1099-C reflecting that the original form is void. Save a copy of the original form sent to you with your bankruptcy discharge paperwork to prove that you should not have received the form in case you are questioned by the IRS about a failure to claim the income.

Insolvency or Mortgage Debt Forgiveness

If you owe more in debts than you own in assets, you are insolvent by definition. If you receive a 1099-C after filing taxes and you are insolvent, you probably do not owe any additional taxes on that amount. You must file form 982 along with the amended return to verify this insolvency and show that no tax is due on the income shown on the 1099-C form. Use this same form if debt was forgiven on your primary residence to show that no taxes are due on this amount as well, but you do not need to prove insolvency in this case.