If Your 1099-C Form is Incorrect Here’s What to Do

by Lynnette Khalfani-Cox, The Money Coach on February 8, 2012

in Taxes


If you had some of your debts cancelled or forgiven last year, the company that cancelled your debt will issue you a Form 1099-C for the amount of the cancellation.

In most cases, the IRS is expecting you to report this amount as part of your gross income. Cancelled debt is considered to be taxable income unless you fall under the category of certain exclusions or exceptions.

If you think that the 1099-C Form you have been issue is incorrect, you will need to take steps to ensure the amount you actually end up reporting to the IRS is accurate.

Here’s what you’ll need to do:


Contact the issuer. Whether it was a bank, a credit card company, or a private lender, get in touch with the issuing party right away to determine how they came up with the figure reported on the form. If they realize their mistake, they may be able to issue you a new 1099-C form right away.

If they feel that they have reported the correct amount, you may need to set up a meeting or conference call to discuss how they came up with the total and request a statement or breakdown of the amount. Be prepared to state the correct amount of debt forgiveness you think is accurate and also be ready to provide any documentation you have supporting all your figures concerning the 1099-C.


Head to a local branch. If your debt forgiveness pertained to something involving a local bank, you may be able to get a corrected form just by going to a local branch. You can ask the branch manager for help with the issue and make sure that you understand what the amount on the 1099-C is actually pertaining to. For example, some banks may include accrued interest, which could be throwing off your calculations.

Request a new form. If you still have time to file your tax return, you can request a new form to attach to your tax return. Make sure you are including the correct amount on the actual tax return or have told your tax preparer to wait for the adjusted amount before filing. The issuing party should be able to fax, email, or send you a new form by mail.

Read: How to know if you will receive a 1099-c.

If you aren’t able to resolve the issue directly with the issuer, fill out your tax return and attach a letter stating any discrepancies. Let the IRS know what steps you took to correct the situation and where your case stands. The IRS may be able to investigate your case further when they have supporting documentation and more information about the communications you’ve had with the creditor or 1099-C Form issuer. The IRS also routinely tries to match up reported income figures, so if someone at the IRS makes a notation about your tax file, they may be able to rectify the situation and use accurate numbers when reviewing your return.


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Lynnette Khalfani-Cox, The Money Coach

Personal Finance Expert and Co-Founder at Ask The Money Coach.com
Lynnette Khalfani-Cox, The Money Coach is a personal finance expert, speaker, and author of numerous books on personal finance. She appears frequently as an expert commentator on television, radio and in print.

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