Why do I need to pay taxes on money I owe a credit card comany? When I was making payments of $300 dollars , I never received a 1099. I am working with a Debt Management company to pay off my debt credit card companies. I finally was able to pay off over $700 settlement to one of my Credit Cards. I have been informed that I will receive a 1099-C for paying off the company.

Pompanomom

A 1099-C is used to report a cancelled debt. In your case, you probably negotiated a final payment that was less than what you actually owed the company. For example, you actually owed $1,000 but the company accepted as a final payment only $700 and 'forgave' the remaining $300 (you don't have to pay it). So the 1099-C will report the $300 as income to you and in most cases, you will have to pay taxes on that.

MukatA

Debt cancellation is reported as other income on Form 1040.