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Does a co-signer on a settled student loan also get a 1099-C?

Los Angeles, CA |

I have a student loan that my mom co-signed. If I were to settle on that student loan, does my co-signer get a 1099-C also?

Attorney Answers 1


  1. Yes. All persons who are jointly and severally liable for a debt (i.e. co-signers) can get a Form 1099-C showing the full amount of the debt that was canceled. However, this does not mean your mom has to pay taxes on the canceled debt.

    FIRST - If your mom's debts/liabilities are greater than her assets (i.e. she is insolvent), then she will not owe any taxes on the canceled debt. She can exclude the entire amount of the canceled debt from her tax return.

    SECOND - Even if your mom is solvent, she will not be required to report the full amount of the cancelled debt to the IRS. The less your mom has to report, the less she will have to pay in taxes. How much she must report depends on the following factors:

    (a) State law;
    (b) The amount of debt proceeds each person received (this would be zero since it was your student loan); and
    (c) How much of any interest deduction from the debt was claimed by each person.

    To determine how much your mom needs to report under this scenario, I recommend contacting a tax professional. However, my guess is that it would be minimal.

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