1099-C Filing Requirements: What You Need to Know

A lender-centric roadmap showing payers when, what, and how to report discharged balances of ≥ $600 to the IRS.

You cancel a borrower’s debt. Now what? If you’re the payer (lender, servicer, or anyone who lends money in the course of business), the IRS expects you to report that cancellation of debt. This guide gives you a plain-English path from “Do I have to file?” to “Filed, acknowledged, and done.”

Along the way, you’ll see exactly when 1099-C is required, the 1099-C threshold (600 dollars), the Form 1099-C codes list (A–H), how to calculate the amount, and the 2026 e-file deadline for the 2025 tax year. Let’s make sure you avoid penalties, mismatches, and messy corrections.

Why this form matters

The IRS uses an automated system AUR (Automated Under-Reporter) to match your 1099-C against the debtor’s tax return. If you skip a form that should have been filed, your borrower may receive a CP2000 notice proposing extra tax. That’s bad for them and bad for your relationship.

There are also real dollars at stake for you:

• Penalty ladder (for returns due in 2026): $60 per return if filed within 30 days; $130 per return if filed by August 1; $340 per return if filed after August 1 or not filed. Intentional-disregard penalty = at least $500 per return (no cap).
• Debt types covered: Credit cards, mortgages, auto loans, HELOCs, student loans, personal lines any money you lend in the course of business.
• Public-company angle: If you’re public, missed filings can show up as SEC “loss contingencies”, drawing unwanted attention.
• Big picture: Proactive, accurate filing preserves goodwill, helps you avoid B-Notice (TIN error) cycles, and keeps your executive team out of Sarbanes-Oxley crosshairs.

Take-away: File on time, file accurately, and you protect both your customers and your institution.

Who must file Form 1099-C

Who files? You do if you’re a bank, credit union, loan servicer, federal agency, auto dealer with in-house financing, fintech lender any entity or person whose trade or business is lending money.

Universal $600 rule: You must file when the total canceled amount (principal + interest + fees) is $600 or more. That’s the core 1099-C filing requirement.

Eight identifiable events (the Form 1099-C codes list) determine why you file. Use the earliest code that applies if several happen:

• A – Bankruptcy (Title 11)
• B – Receivership or similar proceeding
• C – Statute of limitations expired and upheld by court judgment
• D – Election of foreclosure remedies that bar further collection
• E – Probate or similar proceeding
• F – Discharge under an agreement to cancel for less than full consideration
• G – Decision or defined policy to discontinue collection and cancel the debt
• H – Other actual discharge before any of the above

Important: The old 36-month “non-payment test” no longer applies. Use Code G when your written policy or decision ends collection activity, and Code H for any other actual discharge before an identifiable event.

How to calculate the reportable amount (and fill the right boxes)

When you ask “when is 1099-C required” and “what do I report,” this is the part that prevents most errors.

• Box 2 Amount of debt discharged: Enter the total amount of debt actually canceled. If you include any interest in this amount, also show that interest separately in Box 3. Exclude post-charge-off collection costs. Box 2 cannot exceed total debt outstanding minus any amounts you actually received (for example, from a settlement, foreclosure sale, or short sale).
• Repossessed collateral: If the debt is secured and you foreclose or repossess property, report the gross foreclosure bid price (or appraised FMV for abandonments or deeds in lieu) in Box 7 as the fair market value.
• Partial settlements: Report only the forgiven portion in Box 2, not the amount the borrower paid.
• Box 6 Code AH: This must match the identifiable event. Leaving Box 6 blank leads to FIRE/IRIS rejection.

Pro tip for revolving lines: If the same account has multiple charge-offs but the discharge date is the same, you can aggregate into one 1099-C.

Step-by-step: completing Form 1099-C accurately

Here’s a quick, repeatable workflow you can hand to your operations team.

1) Collect your payer data

• EIN, TCC (for IRIS/FIRE e-file), and a contact person borrowers or the IRS can reach.

2) Gather debtor data

• Use a Form W-9 or prior KYC records.
• Run TIN Matching to cut down on B-Notices.

3) Populate the form

• Box 1: Date of the identifiable event (MM/DD/YYYY)
• Box 2: Debt amount discharged (numbers only no commas, no “$”)
• Box 3: Interest portion (optional; leave blank if already in Box 2)
• Box 4: Debt description (e.g., auto loan, credit card, mortgage)
• Box 5: Check if debtor is personally liable
• Box 6: Trigger code (AH)
• Box 7: FMV of property (only when foreclosure/abandonment occurred and you’re using 1099-C to satisfy 1099-A)

4) Distribute copies & file with the IRS

• Copy B to debtor: January 31, 2026 (next business day is Feb 2, 2026; electronic delivery only with affirmative consent; keep the consent for 2 years)
• Copy A to IRS (paper): February 28, 2026 (next business day is Mar 2, 2026; with Form 1096; make sure counts and dollar totals match)
• E-file via IRIS/FIRE: March 31, 2026
• E-file becomes mandatory if you file ≥ 10 aggregate information returns for the year.

5) Fixing issues

• Use “CORRECTED” when you need to change a form already filed and accepted by the IRS.
• “VOID” applies only to paper submissions you never filed.
• For e-file via IRIS/FIRE, follow IRS correction procedures do not use “VOID” for transmission errors.

Your 2026 checklist: deadlines, thresholds & the e-file mandate

Common mistakes—and fast fixes

Real-life scenarios

1. Credit card: You actually discharge $1,250 before any other identifiable event

• Form: 1099-C
• Boxes: Box 2 = $1,250; Box 6 = H

2. Auto loan: You repossess a car (FMV $7,000) on a $10,000 loan

• Form: 1099-C
• Boxes: Box 2 = $3,000 (the canceled deficiency); Box 7 = $7,000; Box 6 = D or F (D if foreclosure remedies bar further collection; F if there’s an agreement to cancel for less than full consideration)

3. Mortgage: Debt wiped out in Chapter 7

• Form: 1099-C
• Boxes: Box 2 = full unpaid principal; Box 6 = A

4. Private student loan: You settle for 60%; $4,800 is canceled

• Form: 1099-C
• Boxes: Box 2 = $4,800; Box 6 = C

5. Medical loan: Statute of limitations expires; you stop collection

• Form: 1099-C
• Boxes: Box 2 = canceled amount; Box 6 = G

Final thought

You, the payer, will have to file Form 1099-C whenever a reportable cancellation of debt occurs and crosses the $600 mark. Master the eight triggers, use the proper Box codes, and hit the 2026 deadlines to avoid penalties, CP2000 mismatches, and B-Notice headaches.

FAQs

1. Does the $600 threshold ever vary?

No. If total canceled debt ≥ $600, you file unless an IRS exception applies.

2. Do I file if only interest was forgiven?

Yes, once the forgiven interest + any other canceled amounts hits $600. Include it in Box 2.

3. Is 1099-C required after a short sale if I filed 1099-S?

Yes. Form 1099-S reports sale proceeds. Form 1099-C reports any unpaid deficiency you cancel.

4. What if the debtor files bankruptcy after I already filed?

Keep your original 1099-C. The debtor can claim any exclusion on Form 982. No correction needed from you.

5. Do corporations receive Form 1099-C?

Yes, when applicable. The debtor may be an individual, corporation, partnership, trust, estate, association, or company engaged in a lending relationship.

6. Can I issue multiple 1099-Cs to the same debtor in a year?

Yes, if there are separate identifiable events on different loans. It’s one form per loan per event.

7. How long should I keep the records?

Keep all 1099-C records for at least 4 years, including filed copies, e-delivery consents, TIN-match results, and any backup withholding documents.