Understanding the difference between IRS 1099-C and IRS 1099-DIV

Last updated on Dec 8, 2025

What is IRS 1099-C?

The IRS 1099-C form is used to report the cancellation of debt. When a lender forgives or cancels a debt you owe, they are required to report this event to the IRS. The forgiven debt is considered taxable income, which means you may need to pay taxes on that amount.

This form plays a crucial role in informing both you and the IRS about any changes to your financial obligations due to debt cancellation.

1.

You may need IRS 1099-C if you have had any of the following situations:
2.

Your credit card debt was forgiven.
3.

A mortgage lender canceled a portion of your home loan.
4.

You had a student loan that was discharged.

Who needs to complete a IRS 1099-C?

Typically, the lender or financial institution that canceled the debt is responsible for completing IRS 1099-C.

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Typically required for:
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Any entity that forgives a debt of $600 or more.
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Creditors who write off loans or debts as uncollectible.
4.

Financial institutions that discharge debts after foreclosure.
5.

Organizations that provide student loans and discharge them.

When is IRS 1099-C due?

IRS 1099-C must be filed by the creditor by January 31 of the year following the debt cancellation. If you canceled a debt in 2023, for instance, the form must be filed by January 31, 2024.

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What is IRS 1099-DIV?

The IRS 1099-DIV form is used to report dividends and distributions received by an individual from stocks and mutual funds. If you earn investment income, you will likely receive this form from your brokerage or mutual fund company.

This form is vital for understanding your investment income, as it details how much you have earned and how much tax you may owe on that earnings.

1.

You may need IRS 1099-DIV if you receive:
2.

Dividends from stocks you've invested in.
3.

Distributions from mutual funds.
4.

Capital gain distributions from your investment activities.

Who needs to complete a IRS 1099-DIV?

Typically, brokerage firms or mutual fund companies must complete IRS 1099-DIV forms.

1.

Typically required for:
2.

Any investment firm that pays dividends of $10 or more in a calendar year.
3.

Mutual funds that distribute capital gains to investors.
4.

Entities distributing dividends to shareholders.
5.

Corporations and partnerships that provide dividend income.

When is IRS 1099-DIV due?

IRS 1099-DIV needs to be filed by January 31 for the previous calendar year's dividends and distributions. Therefore, if you received dividends in 2023, your form will be due by January 31, 2024.

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Key differences between IRS 1099-C and IRS 1099-DIV

While both IRS 1099-C and IRS 1099-DIV are used to report specific financial information to the IRS, they serve very different purposes. Understanding these differences is essential for accurate tax filing.

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Main differences include:
2.

IRS 1099-C relates to canceled debts, whereas IRS 1099-DIV pertains to dividends and investment income.
3.

IRS 1099-C is completed by creditors who forgive debt, while IRS 1099-DIV is filled out by investment firms and mutual funds.
4.

The income reported on IRS 1099-C is generally considered taxable income from forgiven debt, while IRS 1099-DIV reports capital gains and dividends subject to taxation.
5.

Deadlines differ; both forms must be filed by January 31 in the respective year, but they report on different types of financial events.

Understanding potential penalties

Penalties can arise if tax forms like IRS 1099-C and IRS 1099-DIV are incorrect or filed late. These penalties can add undue financial stress, making it crucial to understand the rules surrounding timely and accurate form submission.

Failing to file IRS 1099-C correctly or on time can result in penalties. The IRS may impose a fine depending on how late the form is filed. For example, if the form is filed more than 30 days late, the penalty can reach up to $200 per form, with a maximum of $3 million for corporations. Additionally, if a taxpayer understates their income due to not reporting canceled debt, they may face further penalties on their tax return.

Similar to IRS 1099-C, submitting IRS 1099-DIV late or inaccurately can also incur penalties. The fine for late filing starts at $50 per form if filed up to 30 days late, increasing to $100 for later submissions. The maximum penalty can reach $1.5 million for large businesses. Taxpayers will also be responsible for any additional owed tax if dividend income is reported incorrectly.

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Author:

by Iryna Marchuk

Lead Writer/Blogs Manager at airSlate

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