If you have ever settled a debt, you may have received an unwelcome surprise. Anytime you save $600 or more on a debt balance by negotiating a settlement, the debt collector is required to issue a 1099-C form and report the information to the Internal Revenue Service.
So what exactly is a 1099-C form? In short, it is a declaration that the debt collector provided you with income to pay your debt. And now Uncle Sam and possibly your own state revenue department expect you to pay taxes on that income. (more…)
