[Diagoben]

Hi
My friend George has got the break of $6500 in his debt settlement process. He files his I.Tax return jointly with his wife.George has an expectation of annual income of $52100 in this financial year. How mich amount can he be benefited by the process of debt settlement after adjusting the Income Tax? Please help me out.

[simon]

As Mr. George files his I. Tax return jointly with his wife and his expected annual income of $52100 for this financial year, he will be fallen within 15% Tax bracket (rate applicable for 2004). As a result, Income tax on settled amount will be ($6500*15% = $975). Therefore his gain after a debt settlement will be $5525 ( 6500-975).

Thank you,
Simon