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Forgiven debt- IRS tax surprise you've probably never heard of

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Sock
Valued Member
‎01-12-2014 07:03 PM
‎01-12-2014 07:03 PM

Forgiven debt- IRS tax surprise you've probably never heard of

I have never heard of point #3... You have to pay taxes on forgiven debt!

 

 

 

 

Read more...

 

http://finance.yahoo.com/news/beware-these-5-terrible-tax-surprises-165300601.html

Message 1 of 6
5 REPLIES 5
drkaje
Senior Contributor
‎01-12-2014 07:08 PM
‎01-12-2014 07:08 PM

Re: Forgiven debt- IRS tax surprise you've probably never heard of

I don't believe any of those are new.

 

IIRC, forgiven student loans will generate a tax but the debt cannot carry forward. Have researched it a little bit because of considering the possibility of working for a non-profit and doing IBR the ten years.

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Message 2 of 6
Shogun
Moderator Emeritus
‎01-12-2014 07:35 PM
‎01-12-2014 07:35 PM

Re: Forgiven debt- IRS tax surprise you've probably never heard of

If a creditor writes off  your debt and sends you a 1099C, then you have to include that on your taxes.

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Message 3 of 6
Open123
Super Contributor
‎01-12-2014 07:41 PM
‎01-12-2014 07:41 PM

Re: Forgiven debt- IRS tax surprise you've probably never heard of

If you were insolvent by at least the same amount at the time the debt was given, it's a full deduction.  If you were involvent for part it, the part where you were insolvent would be tax deductible.

Message 4 of 6
Repo-ed
Senior Contributor
‎01-13-2014 04:56 AM
‎01-13-2014 04:56 AM

Re: Forgiven debt- IRS tax surprise you've probably never heard of

@Shogun wrote:

If a creditor writes off  your debt and sends you a 1099C, then you have to include that on your taxes.

Any time table on how long they have after w/o, to send you that 1099C?

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Message 5 of 6
guiness56
Epic Contributor
‎01-14-2014 07:00 AM
‎01-14-2014 07:00 AM

Re: Forgiven debt- IRS tax surprise you've probably never heard of

@Repo-ed wrote:
@Shogun wrote:

If a creditor writes off  your debt and sends you a 1099C, then you have to include that on your taxes.

Any time table on how long they have after w/o, to send you that 1099C?

No, they can send you a 1099-C anytime after they write it off.

 

It just has to be claimed in your taxes the year you recieve it.

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