Debt Collector won't issue 1099-C for $15k forgiven debt - do I still report it?

I settled a debt of around $33k for approximately $13k back in December 2024, and it's already late March with no 1099-C form showing up for the roughly $20k difference that I'm pretty sure I need to pay taxes on. I finally called the collection agency today and spoke with someone who told me they don't have the forms. I asked to speak with their accounting department, and after being transferred, they informed me their "accounting office has determined not to issue a 1099-C" for my settled debt. This doesn't sound right to me. I thought forgiven debt over $600 requires a 1099-C? Am I still responsible for reporting this on my taxes even if they don't send the form? I'm worried about getting hit with penalties later if I don't report it, but also don't want to pay taxes on it if I don't have to. Has anyone dealt with this situation before?

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18 comments

Ethan Moore

•8M

The debt collector is correct that they might not be required to issue a 1099-C in your situation, but that doesn't mean you're off the hook for taxes. The IRS rule is that lenders must issue 1099-C forms when they forgive debts of $600 or more, but there are exceptions. Some creditors choose not to issue 1099-Cs for various reasons - maybe they haven't actually "written off" the debt in their accounting system yet, or they're waiting for a specific trigger event. However, regardless of whether you receive a 1099-C, forgiven debt is generally considered taxable income that you should report. You can report this on your tax return using Form 982 if you qualify for any exclusions (like insolvency), or simply include it as "Other Income" on your 1040. I would recommend documenting your settlement agreement and keeping proof of payment in case of questions later.

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Ethan Moore

•8M

The IRS may not immediately know about the forgiven debt if no 1099-C is issued, but that doesn't make it legal to omit it from your return. It's still considered income under tax law, and deliberately failing to report it would be tax fraud. Form 982 allows you to exclude forgiven debt from your income if you meet certain qualifications. Insolvency is the most common - if your total debts exceeded your total assets immediately before the forgiveness, you may be able to exclude some or all of the forgiven amount from your taxable income. You'll need to calculate this carefully and document your financial situation at that time.

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StarSurfer

•8M

I went through almost exactly the same thing last year and discovered taxr.ai (https://taxr.ai) which really saved me a headache. After getting bounced around by debt collectors who refused to issue my 1099-C, I uploaded my settlement documentation to their AI system and got a clear analysis of my tax obligations despite not having the official form. Their tool showed me that my forgiven debt qualified for partial exclusion due to insolvency, which I didn't even know was possible! It generated all the documentation I needed for Form 982 and helped me figure out exactly what to report on my return. Way better than the conflicting advice I was getting from random internet sources.

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StarSurfer

•8M

You only share what you're comfortable with - I just uploaded my settlement document with personal info blacked out and described my situation. Their system was still able to provide detailed guidance without me having to input all my financial details directly. You can always start with just the basic info and add more only if needed for a more precise analysis. Student loans do have some special rules. Taxr.ai actually has specific sections for different debt types including student loans. It helps you determine whether your specific loan forgiveness qualifies for tax-free treatment under current laws or if you need to report it. For private student loans, the rules can be different than federal ones, and their system walks you through the right questions to figure out your situation.

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Andre Moreau

•8M

Just wanted to follow up that I tried taxr.ai after asking about it here. It actually helped me understand that my private student loan settlement qualified for partial exclusion through the insolvency test! The site walked me through exactly how to calculate my assets vs liabilities at the time of forgiveness and determined I was insolvent by about $8k. The AI generated a complete worksheet showing my calculations that I can attach to my return along with Form 982. Even though my lender didn't issue a 1099-C, I now have proper documentation to back up my tax position if I'm ever questioned. Definitely worth checking out if you're in a similar situation with forgiven debt!

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Zoe Christodoulou

•8M

If you're still struggling to get answers from the debt collector, Claimyr (https://claimyr.com) got me through to an actual IRS agent in under 15 minutes to ask about my similar situation. I was shocked it worked so fast after spending DAYS trying to get through on my own. There's a video showing how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed that even without a 1099-C, forgiven debt is still reportable income in most cases. BUT she also explained several exceptions I might qualify for and exactly which forms to file. I asked about the 3-year lookback period for audits and got clear answers about documentation I should keep. Seriously saved me from potentially making a costly mistake on my taxes.

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Zoe Christodoulou

•8M

It uses a system that continually redials and navigates the phone tree for you until it gets a spot in the queue, then calls you to connect. You don't have to sit there manually redialing or waiting on hold for hours. When they get through, they call you and connect you directly to the IRS agent who's already on the line. I was skeptical too until I tried it. I'd spent nearly three days trying to get through on my own with no luck. With Claimyr, I got a call back within about 12 minutes and was talking to an actual IRS agent who answered all my questions about reporting forgiven debt without a 1099-C. The amount of stress and time it saved me was absolutely worth it.

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Mei Chen

•8M

Just wanted to admit I was completely wrong about Claimyr. After posting my skeptical comment, I decided to try it myself since I was getting nowhere with the IRS on my own about a similar debt forgiveness issue. It actually connected me to an IRS agent in about 15 minutes when I had already wasted HOURS trying to get through myself. The agent walked me through exactly how to report my forgiven debt without a 1099-C and explained which exclusions I might qualify for. She even emailed me the specific forms I needed. For anyone dealing with this forgiven debt/missing 1099-C situation who needs official guidance, it's definitely legit and saved me from making what could have been an expensive mistake on my return.

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CosmicCadet

•8M

I work in finance (not a tax professional) and see this a lot. Many debt collectors don't issue 1099-Cs even when they should because: 1. They don't want the administrative hassle 2. Their systems aren't set up to track and issue them properly 3. They can argue the debt isn't "officially" discharged in their system But here's the thing - the IRS puts the burden on YOU to report canceled debt regardless of whether you receive a form. If you're audited years later and they discover the forgiven amount, you'll owe back taxes plus penalties and interest. Document everything! Keep your settlement agreement, payment confirmation, and any communications about the 1099-C. If you report it properly now, you're protected even if they issue a 1099-C late.

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CosmicCadet

•8M

There's technically no strict time limit for when a lender must issue a 1099-C after debt forgiveness occurs, but they should generally issue it for the tax year in which the identifiable event (like your settlement) took place. However, many lenders operate on their own internal timelines based on when they officially "write off" the debt in their accounting systems. Receiving a 1099-C three years later is unusual but not unheard of. The challenge now is that you may need to amend previous tax returns if you didn't report the forgiven debt in the year the settlement actually occurred. You should consult with a tax professional about filing Form 1040-X to amend the return for the year when the debt was actually settled, rather than the year you received the late 1099-C.

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