It’s unwise to ever ignore a canceled debt, or receipt of a 1099-C, especially since the IRS expects to have that specific income included within your return – unless there is an exclusion or exception. You should also track canceled debt, even if you didn’t receive a 1099-C. The receipt of a 1099-C is no indicator of validity, as creditors could have submitted the form to the IRS, and you simply never received a copy. Most likely, you still need to claim the income and pay any and all taxes on it.nnOnce you have confirmed cancellation of debt, you may figure out if you qualify for exclusions or an exception. While it may be difficult to figure out how much you are required to pay, seeking out the advice of a tax professional may be extremely helpful. While you may be used to filing taxes on your own, cancellation of debt can make things complicated. Tax professionals have the knowledge to determine whether you are eligible to reduce the amount of canceled debt for taxes, or skip tax payments on debt cancellations altogether.