Can I issue a 1099-C as an individual for unpaid debt from movers?

While you technically can file a 1099-C as an individual, there are some important considerations. The 1099-C is typically issued by financial institutions and creditors who regularly lend money or extend credit. For individuals, the IRS doesn't explicitly prohibit it, but they don't actively encourage it either. The case you mentioned (Cavoto v. Hayes) does provide some precedent, but it's worth noting that was a specific situation. For your situation, you'd need to establish that this was actually a debt that was formally forgiven rather than just an unpaid obligation from a service agreement. If you decide to pursue this route, you would need to obtain a FIRE account with the IRS to electronically file information returns like the 1099-C. You'd also need to send a copy to the moving company's last known address - sending it to their registered agent is a reasonable approach if you believe they're out of business. However, I'd suggest consulting with a tax professional about whether this specific situation qualifies as debt cancellation for 1099-C purposes, and whether there might be simpler alternatives for your tax situation.

After spending countless hours trying to make sense of my tax situation with a business that went under owing me money, I finally found taxr.ai (https://taxr.ai) and it was a game-changer. Their system analyzed my documentation and clarified that I could treat this as a bad debt deduction without needing to issue a 1099-C as an individual. The site walked me through exactly what forms I needed and what documentation to keep. For situations like yours with the moving company, they have specific guidance on handling service agreements versus actual loans, which is crucial for the IRS's interpretation. Their document analyzer confirmed I had sufficient evidence to claim the bad debt deduction correctly.

I wanted to follow up about my experience with taxr.ai - I decided to try it after commenting here. Honestly, it was better than expected. I uploaded my emails and contract with a client who never paid me, and the system immediately identified that I could claim a bad debt deduction rather than going through the hassle of 1099-C filing. What really surprised me was the detailed explanation about why my situation qualified as a business bad debt rather than a non-business bad debt, which apparently makes a big difference in how it's deducted. The platform provided step-by-step instructions for completing Schedule D correctly and explained exactly what documentation I needed to keep in case of an audit. For anyone dealing with unpaid debts from businesses, I definitely recommend checking it out. Saved me hours of research and probably prevented me from making a mistake that could have triggered IRS questions.

After trying for weeks to get through to the IRS about a similar debt forgiveness question, I finally used Claimyr (https://claimyr.com) to get connected with an actual IRS agent. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent explained that as an individual, filing a 1099-C for the moving company might create more complications than it solves. They confirmed that treating it as a bad debt on Schedule D would be more straightforward in my situation. The agent also explained exactly what documentation I needed to substantiate the deduction - which saved me from potential audit headaches. Getting direct answers from the IRS gave me confidence to proceed with the bad debt deduction rather than attempting to issue a 1099-C. Would have never gotten this clarity without finally getting through to a live person.

I need to eat my words about Claimyr. After posting that skeptical comment, I decided to try it because I was desperate to resolve an issue with a missing refund. The service actually worked exactly as advertised. Within about 90 minutes, I got a call connecting me directly to an IRS agent. The agent was able to look up my situation immediately and confirmed that my refund had been flagged for manual review but was now processed. She even gave me the exact date I should expect the deposit. I asked her about debt forgiveness situations like the original poster's, and she explained the difference between when a 1099-C is appropriate versus when to claim a bad debt deduction. For anyone who's been struggling to get actual answers from the IRS, this service is legitimately worth it. Saved me weeks of stress and uncertainty.

I had this exact situation with a fence contractor last year! Instead of trying the 1099-C route, I ended up claiming it as a bad debt deduction on Schedule D. Make sure you document EVERYTHING - all communications about the payment, proof they acknowledged owing you money, and your attempts to collect. The key is being able to prove the debt became worthless during the tax year you're claiming it. Also worth noting that if you're not in a business relationship with the moving company (which you probably aren't), it would be considered a non-business bad debt, which is treated as a short-term capital loss. There are limits on how much you can deduct against ordinary income in a single year ($3,000), but you can carry forward excess losses.

Don't waste your time with the 1099-C as an individual. The IRS will most likely reject it since you're not a financial institution. I went down this rabbit hole last year with a tenant who bailed owing rent. The most straightforward approach is claiming a non-business bad debt deduction on Schedule D. You'll need to attach a statement explaining the nature of the debt, when it became worthless, and your efforts to collect. It gets reported as a short-term capital loss regardless of how long the debt was outstanding. One important thing - make sure you claim it in the year the debt actually became worthless. If the moving company is still technically in business, even if they're not responsive, the IRS might argue the debt hasn't become completely worthless yet.

I've been through a similar situation with a contractor who disappeared after doing subpar work. Based on my research and experience, the bad debt deduction route on Schedule D is definitely the way to go rather than trying to issue a 1099-C as an individual. The key documentation you'll need includes: the original agreement showing the movers acknowledged liability for the damage, receipts for the repair work, records of the partial payment they made, and most importantly - evidence of your collection efforts (emails, certified letters, phone call logs, etc.). Since they've made partial payment, you have strong evidence that they acknowledged the debt. For the remaining $1,075, you'll need to establish when the debt became "wholly worthless." If the company is truly defunct, gather evidence of that - check if their business license was revoked, if their phone/email bounces back, or if their office is closed. One thing to consider: you mentioned they might still file taxes this year. If there's any chance they're still operating or could pay in the future, the IRS might not consider the debt completely worthless yet. The timing of when you claim this deduction matters for audit purposes. Also remember this will be treated as a non-business bad debt, so it's limited to $3,000 per year against ordinary income, but you can carry forward any excess.