Latest Posts
Home > Ask The Get Out of Debt Experts > 1099 > I Got a 1099-C and My CPA Says I Have to Pay Taxes On It

I Got a 1099-C and My CPA Says I Have to Pay Taxes On It

“Dear Steve,

I’m confused now. I just had 1099-c sent that canceled out 51,000.00 of debt (30,000.00) from one creditor who never even called me, or sent nasty emails. The rest was the balance from other cards I settled for much lesser. I just went to my cpa and found out I owe 19,000.00 in taxes to the irs for the above mentioned debt. He has advised I file solvency which I have, so waiting to hear back on if it’s accepted. I would of received a refund of $6,000.00 but the irs will apply that towards the balance owed, and put me on a payment plan for 5 years. So If this debt is not discharged, why am I paying it back if it comes to that, and later receive a call that I still owe the creditor that’s a double wamy! so what to do?”


I think what you are saying is that your CPA has advised you to file bankruptcy. But if you are insolvent you don’t need to do that to eliminate your tax liability. Instead, you need to complete IRS Form 982.

Yes, you would still owe the creditor and yes it is a double hit.

The reporting of the forgiven debt is a tax function and the collectibility of the debt is a legal function of the agreement with the creditor.

Please post your responses and follow-up messages to me on this in the comments section below.

Get Out of Debt Free Hotline
debt settlement helpstudent loan help

About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

Get My FREE Get Out of Debt Guy Newsletter

It is the smart thing to do.

I promise to keep your email safe and secure.


I want to keep you posted each weekday with just one email about the latest get out of debt news, scam alerts and information to beat back debt.

You can unsubscribe at any time with just one click.

After you subscribe, check your email to confirm your subscription. If the confirmation email does not appear in your inbox in a few minutes, check your spam folder for it. Sometimes it likes to annoyingly hide there.

  • It will keep you posted on the latest scams.
  • You will be alerted to the latest articles.
  • You will wind up smarter than everyone else dealing with debt.