Credit and Debt Blog
A Service of Debtors Unite, Inc.
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The IRS views forgiven debt as a form of income. We know that debt settlement can cause your taxes to go up. Did you know that foreclosure works the same way?
That’s right. If your foreclosed property sells for less than the mortgage balance, you have pay taxes on the difference. Some foreclosed properties are selling for tens of thousands of dollars below what is owed, meaning tax bills could reach several thousands of dollars extra. One proposed bill would change that though. (more…)
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…)
