Need help with Form 1099-C for tenant debt forgiveness - what's the process?

So I've got this nightmare tenant situation I'm dealing with. They moved out and left us with a mountain of debt - like serious damage to the property plus months of unpaid rent. It's probably close to $9,500 at this point. I've talked to a couple of landlord friends, and they said going after them in court is basically pointless since this person clearly has no money. They suggested we consider debt forgiveness and issue a 1099-C. I've never done this before and I'm totally confused about the process. From what I understand, filing a 1099-C would mean forgiving their debt but they'd have to report it as income on their taxes. I'd keep one copy, give one to the ex-tenant, but then what? Do I submit one to the IRS? Are there specific deadlines I need to worry about for the 2025 tax season? Also, does anyone know if there's a minimum amount that needs to be forgiven for this to be required? Would really appreciate any guidance from someone who's been through this process before.

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20 comments

Amara Eze

•8M

You're on the right track with the 1099-C (Cancellation of Debt) form. When you forgive a debt of $600 or more, you're required to report it to the IRS. The process isn't too complicated once you understand it. First, you'll need to obtain the Form 1099-C from the IRS website or tax software. You'll complete it with your information as the creditor, the former tenant's info as the debtor, and the amount of debt being canceled. You'll need to distribute the copies as follows: Copy A gets sent to the IRS, Copy B goes to the debtor (your former tenant), and Copy C is for your records. Important deadlines: You must provide Copy B to the debtor by January 31, 2025 (for debts canceled in 2024). Copy A must be filed with the IRS by February 28, 2025 if filing by paper, or March 31, 2025 if filing electronically. The $600 minimum you mentioned is correct - if the forgiven amount is less than that, you aren't required to file the 1099-C (though you can still choose to forgive the debt).

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Amara Eze

•8M

If the tenant disputes the amount, they can certainly try, but you should have documentation supporting the debt amount (lease agreement, record of payments, documentation of damages, etc.). It's always a good idea to send a formal debt forgiveness letter along with the 1099-C explaining how you calculated the amount. Regarding taxes, you generally won't owe taxes on the forgiven amount because you never received that income in the first place. However, if you've been reporting your rental income on a cash basis (only reporting income when received), then the forgiven amount wasn't previously reported as income, so there's no tax impact to you. If you've been using accrual accounting (reporting income when earned, not when received), you may have already claimed the unpaid rent as income, in which case you can claim a bad debt deduction to offset it.

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NeonNomad

•8M

After dealing with a similar headache last year, I found taxr.ai (https://taxr.ai) super helpful for this exact situation. I had a tenant who bailed owing like $7k, and I was confused about handling the 1099-C forms too. Their system walked me through all the details needed for proper filing - made sure I had the right identifiers for my tenant, helped calculate the exact amount to report as canceled debt, and explained the different codes to use on the form. The best part was it showed me exactly what documentation I needed to keep in case the tenant disputed it or the IRS had questions. Saved me from making a bunch of mistakes that might have triggered an audit notice.

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NeonNomad

•8M

For verifying tenant information, you only need to use what you have in your records - their name and SSN or TIN from your lease agreement. The obligation is to make a reasonable attempt to provide correct information. If they've moved, you'd use the last known address. The IRS understands people move and doesn't hold you responsible for tracking them down. Regarding bankruptcy situations, that's actually one of the tool's strengths. It has specific guidance for Code A (bankruptcy) vs. Code E (normal cancellation) situations. It explains how bankruptcy affects your reporting requirements and helps determine if the 1099-C is even needed in certain bankruptcy scenarios. The tool flags these special situations and explains the different rules that apply.

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Fatima Al-Hashemi

•8M

Just wanted to follow up! I tried taxr.ai and it was exactly what I needed. My situation was even messier than I initially explained - had multiple months of partial payments that made calculating the exact forgiven amount confusing. The system helped me properly document everything and walked me through each section of the form. It even explained which cancellation code to use (I needed Code E for my situation). I was overthinking the tenant's current address, but the tool clarified I just needed to use the last known address from my records. Also got great guidance on the timing - I'm planning to issue the 1099-C in December so it falls in this tax year. The step-by-step process removed all the guesswork!

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Sofia Martinez

•8M

I had a similar issue with a commercial tenant last year and spent WEEKS trying to get someone at the IRS to answer my questions about 1099-C requirements. Calling their main line was useless - always on hold for hours only to get disconnected. Finally found https://claimyr.com and watched their demo (https://youtu.be/_kiP6q8DX5c). They got me connected to an IRS agent in about 20 minutes when I'd previously wasted days trying. The agent walked me through exactly how to handle my specific situation with the 1099-C and clarified that I needed to use different codes since it was a commercial property.

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Sofia Martinez

•8M

They use an automated system that essentially waits on hold for you. When you sign up, they call the IRS and navigate through all the phone menus and hold queues. Their system basically sits on hold instead of you personally waiting. When an actual IRS agent finally answers, their system immediately calls your phone and connects you directly to that live agent. It's not bypassing anything - they're just doing the waiting for you. The technology handles all the hold time, and you only get called when there's an actual human ready to talk. That's why I went from wasting entire afternoons on hold to just getting a call when an agent was available. Nothing magical about it - just clever use of technology to solve a frustrating problem.

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Ava Thompson

•8M

I need to follow up on my skeptical comment. I actually tried Claimyr yesterday out of desperation (after another 2-hour hold with the IRS ended in a disconnection). Honestly, I was shocked when my phone rang about 40 minutes after signing up, and there was an actual IRS agent on the line! I didn't have to sit through a single minute of hold music. The agent answered all my questions about the 1099-C for my tenant situation - turns out I was using the wrong cancellation code which would have caused problems. For anyone dealing with tenant debt forgiveness, getting specific guidance from the IRS directly made a huge difference. They explained exactly how to handle my situation where the tenant had partially paid some months before disappearing.

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CyberSiren

•8M

Something important to consider - make sure you document EVERYTHING about the debt before forgiveness. I went through this last year and my ex-tenant tried to dispute the 1099-C I issued. Gather all evidence of the debt - signed lease agreement, payment history showing missed payments, photos of damage if applicable, any communications about the debt, and a calculation showing how you arrived at the total amount. Send a formal debt forgiveness letter via certified mail (keep proof of delivery!) and include an itemized statement. This creates a paper trail that protects you if they try to claim they don't owe the money or if the IRS questions the amount.

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CyberSiren

•8M

Email is better than nothing, but it doesn't carry the same legal weight as certified mail for documentation purposes. However, if you don't have a current address, sending a detailed email and keeping records of it (including delivery/read receipts if possible) is a reasonable alternative. In your situation, I'd recommend sending the documentation both by email and to their last known physical address with tracking. This shows you made a reasonable effort to inform them. Document everything carefully - print and save copies of the emails, take screenshots of delivery confirmations, and keep all tracking information. The key is demonstrating you took reasonable steps to notify them, even if they've disappeared.

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Ashley Adams

•5M

One thing I learned the hard way - make sure you have the tenant's correct SSN or TIN before filing the 1099-C. I had a situation where I only had a partial SSN from an old application, and the IRS rejected my filing. They require the complete, accurate taxpayer identification number. If you don't have their SSN, you can try reaching out one final time requesting it specifically for tax reporting purposes. If they still don't respond, you can file the 1099-C with "APPLIED FOR" in the TIN field, but this may trigger additional IRS correspondence later. Also worth noting - if your tenant was a business entity rather than an individual, you'd need their EIN instead of SSN, and the reporting requirements can be slightly different. The $600 minimum still applies, but make sure you're clear on whether you're dealing with personal or business debt forgiveness.

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