Unexpected 1099-C Cancellation of Debt for medical debt - but I paid off a credit card?
Title: Unexpected 1099-C Cancellation of Debt for medical debt - but I paid off a credit card? 1 I just got this weird 1099-C Cancellation of Debt form in the mail and I'm completely confused. The amount shown is $1,096.25, but it's labeled as "medical" debt? The thing is, I did pay off a credit card debt around that same amount last year, but I definitely haven't been to any hospital or doctor in 2024. I only went to the dentist, and my insurance covered everything there. The form has a Code F on it too. I have no idea why this would be categorized as medical debt when I think it's related to my credit card payoff. Has anyone dealt with this before? Is this going to affect my taxes? I'm really confused about why I'm getting a cancellation of debt form when I actually paid the debt. Any insight or help would be super appreciated!
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Ethan Moore
3 This is actually a common mix-up! A 1099-C is issued when a creditor forgives debt of $600 or more - it doesn't mean you still owe anything, but rather that the IRS considers forgiven debt as taxable income. Code F indicates "creditor's decision to discontinue collection" which suggests the credit card company wrote off part of your debt and then you may have settled for less than the full amount. Some credit cards are associated with specific purposes (like medical expenses) in their internal systems, even if you used the card for various purchases. If you used that card for any medical expenses in the past, they might have categorized the entire account that way. The most important thing is to verify if you truly paid the full original amount. If you settled for less (paid $1,096.25 when you actually owed more), then you'll need to report the forgiven portion as income on your tax return. If you paid the debt in full, you should contact the creditor and ask them to correct the 1099-C since it was issued in error.
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Ethan Moore
•7 Wait, but I thought if you pay a debt settlement, the company can't report it as income? I settled a $5k debt for like $3k last year and didn't get any tax forms. Should I be worried?
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Ethan Moore
•3 Any debt forgiveness over $600 is generally reportable as income - it's considered income because you received the benefit of not having to repay that money. Your creditor should have sent a 1099-C, but sometimes they don't follow proper procedure. Just because you didn't receive a form doesn't mean it wasn't reportable. Some types of forgiven debt have exceptions, like certain mortgage debt or debt forgiven in bankruptcy. If you're concerned, you might want to check your credit reports to see how the account was reported and consider speaking with a tax professional about your specific situation.
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Ethan Moore
12 I went through a similar situation with medical debt that turned out to be a credit card I used for dental work. I wasted weeks trying to figure it out until I discovered taxr.ai (https://taxr.ai). Their document analysis instantly identified that my 1099-C was miscategorized - the credit card company had coded some purchases as medical even though the card was used for various things. The tool analyzed my credit card statements against the 1099-C and showed exactly where the discrepancy was. Turns out the credit card company had applied a promotional rate to "medical purchases" which flagged the account in their system. The analysis provided by taxr.ai gave me everything I needed to get the 1099-C corrected before filing.
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Ethan Moore
•14 How does taxr.ai handle these credit card statement analyses? My situation is kind of similar but more complicated because I consolidated multiple debts.
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Ethan Moore
•9 I'm skeptical about using online tools for tax documents. Did you have to upload all your personal financial info? Seems risky with all the identity theft nowadays.
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Ethan Moore
•12 Their system can analyze multiple accounts at once - you just upload statements from each source and the debt consolidation documents, and it traces how the debts were transferred and categorized. The analysis breaks down the original debt sources which is exactly what you need for complicated consolidations. As for security concerns, they use bank-level encryption and don't store your statements after analysis. You can also redact account numbers before uploading if you're worried. I was hesitant too, but after researching their security protocols I felt comfortable using it. The peace of mind from having accurate documentation for the IRS was worth it for me.
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Ethan Moore
9 Just wanted to follow up about my skepticism with taxr.ai - I ended up trying it after getting a mysterious 1099-C myself. The document analysis identified that my "student loan" 1099-C was actually from a retail store credit card that had been sold multiple times to different debt buyers, and somewhere in that process it got miscategorized. The analysis showed exactly when and how the debt changed categories, with a complete paper trail I could show the IRS. Saved me from potentially reporting the wrong information on my taxes. Their security was solid too - they don't keep your documents after analysis and the interface was actually really straightforward.
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Ethan Moore
19 If you're having trouble getting answers from the creditor about this 1099-C situation, try using Claimyr (https://claimyr.com). I spent weeks trying to reach someone at the finance company that issued my incorrect 1099-C with no luck. Claimyr got me through to an actual human at the IRS who explained exactly what documentation I needed to dispute the form. You can see how it works here: https://youtu.be/_kiP6q8DX5c Getting to talk to a real person at the IRS changed everything - they walked me through the process of documenting that I had paid the debt in full and explained how to properly note this on my tax return until the corrected form arrived. Saved me hours of hold music and frustration.
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Ethan Moore
•23 How does Claimyr actually work? Do they just call for you or what? I don't understand how they can get through when nobody else can.
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Ethan Moore
•16 Yeah right. Nobody gets through to the IRS. I've been trying for months about a similar issue. If this actually works I'll eat my hat.
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Ethan Moore
•19 They basically wait on hold for you. You enter your number on their site, and when they reach a human at the IRS, you get a call connecting you directly to that person. They use a system that navigates the phone menus and waits in the queue so you don't have to. It's not magic - they're just using technology to handle the painful waiting part. The IRS phone systems are designed to handle a certain call volume, and they have ways of optimizing when and how to call. I was skeptical too until I got connected to an actual IRS agent after trying for weeks on my own with no success.
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Ethan Moore
16 I need to publicly eat my hat. After posting my skeptical comment, I tried Claimyr out of desperation because I was getting nowhere with my 1099-C issue. Within 2 hours, I was talking to an actual IRS agent who explained that my "canceled debt" was actually reported incorrectly. The agent walked me through Form 982 which can exclude certain canceled debts from income. In my case, I qualified for the insolvency exclusion, which I had no idea existed. They also sent me to the right department to dispute the incorrect classification on the form. Definitely worth it after spending months trying to get through on my own.
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Ethan Moore
5 One thing to check is if the creditor sold your debt to a collection agency at some point. When that happens, the original creditor might issue a 1099-C even though you eventually paid off the debt to the collection agency. It's a common disconnect in their systems.
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Ethan Moore
•1 That makes a lot of sense actually. I did get some collection calls before I paid it off. So if that's what happened, what should I do? Contact the original creditor?
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Ethan Moore
•5 Yes, contact the original creditor first. Ask them specifically if they sold your debt and then issued the 1099-C. Request documentation showing when they sold it and to whom. Then contact the collection agency and get proof that you paid them in full. You'll need both documents to show that you didn't actually have canceled debt - the debt was transferred, not forgiven. Submit a dispute to the creditor that issued the 1099-C and ask them to issue a corrected form. Keep copies of all communications and payment receipts in case you need to explain this situation to the IRS.
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Ethan Moore
8 Has anyone used TurboTax to handle a 1099-C situation? I got one too and have no idea where to even report this in the software.
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Ethan Moore
•11 TurboTax has a specific section for 1099-C under "Income" and then "Less Common Income." It'll ask for all the information from the form and help determine if any exclusions apply. Just make sure you have the actual 1099-C in front of you when you get to that section.
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