Taxable Income Question on Settlements
Date: Sat, 05/16/2009 - 11:55
If I negotiate a settlement with a creditor on my own - say 40 cents on the dollar - do I have to pay income tax on the amount the creditor will be charging off?
If I do, does anyone know if he pays income taxes on that same amount that he will be charging off?
Thanks .....
If I do, does anyone know if he pays income taxes on that same amount that he will be charging off?
Thanks .....
Well from what I have read and been told by my CC company they w
Well from what I have read and been told by my CC company they will file a 1099 with IRS on anything over $600. Those numbers could be wrong but they do file with the IRS. Say you owe $20k and you settle for $5k, thats 15k worth of money you got to spend and now are not paying off. They way I understand it is the 15k will get reported to the IRS and you have to add that next year to your earned income. If I am wrong I sure someone here will point that out and give the correct info.
Yes creditors are required to report the forgiven part to the IR
Yes creditors are required to report the forgiven part to the IRS. There are insolvency guidelines that pertain to this. I actually had some creditors not report this.