Hello Everyone,
Just a tip for those of you who are working with debt settlement. Now that tax time is coming this is something that we should all be aware of and keep in mind throughout the year.
When you negotiate with your credit card company-ies to reduce your balance you may still be responsible for the amount that your balance was reduced. In other words, if you had a credit card balance of say $10,000 and the creditor reduced it by $4000 you may still be responsible for the taxes on the $4000 to the IRS. The agency considers it earned and taxable income. You most likely will receive a 1099C; however some companies may not fill out the 1099C, but still send it to the IRS. Sometimes clients may not receive a 1099C form for up to two years after the debt has been forgiven.
Some mortgage loan modifications may be considered debt forgiveness.
Please consult your tax advsior for advice on your personal situation.
I hope this article was helpful and for more info. on related topics please go to patricklacy.com
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