Taxable income
Date: Wed, 06/09/2010 - 10:24
When your bills are settled, the IRS considers the amount forgiven as taxable income. For example, if your forgiven debt is $4500 and you're in the 15% tax bracket, then you'll have to pay $675 as income tax. However, you will not be liable for such taxes if the creditor settles your debt because you protest an owed amount.
I have heard that there is an IRS form that one fills out that based on hardship one can be exempt from paying taxes on the forgiven debt. but I cannot find any information on this. Can you help?
Thanks!
I have heard that there is an IRS form that one fills out that based on hardship one can be exempt from paying taxes on the forgiven debt. but I cannot find any information on this. Can you help?
Thanks!
