 TITLE: What Happens with Canceled Debt? CONTENT: How Does Canceled Debt Affect Taxes?\n------------------------------------\nThe IRS considers most forms of forgiven, canceled or settled debt as income for tax purposes. If the amount of your canceled debt is more than $600 and it's considered taxable, the lender is required to send you a 1099-C form, which includes the cancelled amount that you'll need to report.\nIf your forgiven debt is less than $600, you might not get a 1099-C, but you'll still need to report it on your tax return.\nDepending on how much debt has been discharged and your current tax situation, a canceled debt could result in a massive tax bill. So if you've recently taken advantage of a debt forgiveness program, you'll want to find out whether it's taxable and how to prepare, so you don't get blindsided at tax time. END