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1099 C

What Form 1099-C means, whether canceled debt is taxable, how the insolvency exclusion works, and a calculator for the taxable amount.

Updated November 4, 2026. Free, no sign-up; everything runs in your browser and nothing you type is stored.

1099 C cancellation of debt calculator

Box 2 canceled debt ($)Total liabilities just before cancellation, incl. this debt ($)Fair market value of all assets just before ($)Canceled in a title 11 bankruptcy?

Taxable canceled debt

–

–Excluded on Form 982

–Insolvency amount

When you get a 1099 C

A financial institution, credit union or federal agency must file Form 1099-C when it cancels $600 or more of debt (IRS Publication 4681). Box 2 shows the amount canceled.

Is canceled debt taxable?

Generally yes, as ordinary income on Schedule 1. The main exceptions, claimed on Form 982:

Bankruptcy: debt canceled in a title 11 case is fully excluded.
Insolvency: if your liabilities exceeded the fair market value of your assets immediately before the cancellation, you exclude canceled debt up to the amount you were insolvent. Example: $60,000 of debts and $52,000 of assets = $8,000 insolvent, so $8,000 of a $12,000 cancellation is excluded and $4,000 is taxable.
Other exclusions include qualified farm and real property business debt, and some student loan discharges.

Excluding debt usually reduces tax attributes such as loss carryovers or basis. Struggling with what's left? See debt payoff calculator.

Common questions

Is a 1099-C taxable?

Usually, as ordinary income, unless an exclusion such as bankruptcy or insolvency applies.

How is insolvency calculated?

Total liabilities minus the fair market value of total assets immediately before the debt was canceled.

What form excludes canceled debt?

Form 982.

Sources

More paycheck and tax calculators: 1098 T · 1099 B · 1099 INT · 1099 K Form

General information, not financial, tax or legal advice. Check important numbers with the official source before acting on them.