Posted on
September 20, 2009
at
10:22 pm
i know for a fact that when i settle my debt, there's a certain portion of it that will be forgiven, but how will that appear on my credit report? and how's that going to appear on my tax return?been boggled about this issue with debt settlement and the IRS. i don't want to risk reporting something fraudulent or whatnot
Posted on
September 20, 2009
at
10:40 pm
In reference to your query on debt settlement and the IRS:If the forgiven amount is at least $600 or more, the IRS considers it as as taxable income. What the creditor needs to do is provide the consumer with a form that illustrates the details of the forgiven debt as well at the interest on it.
Posted on
September 21, 2009
at
12:52 am
The form in question is a 1099-C tax form. The IRS doesn't require consumers to report forgiven debt amounts if they were insolvent when the creditor decided to grant forgiveness. Additionally, the IRS does not allow consumers to "exclude any amount of cancelled debt that is more than the amount by which (they) are insolvent."
Posted on
September 21, 2009
at
1:26 am
How would you know if you are insolvent, then? What is the IRS's definition of insolvency?
Posted on
September 21, 2009
at
3:05 am
Insolvency is the state wherein a consumer is totally incapable of paying for their debts. The amount of the debts that s/he has exceeds their total assets, or how much money and property is under the debtor's ownership.
For more on insolvency.
Posted on
September 21, 2009
at
3:32 am
Can I be able to settle my debt with the IRS, too? Or is that a completely different thing altogether?
Posted on
September 21, 2009
at
3:41 am
Settling your tax debt with the IRS requires certain qualifications that need to be met. Being unable to pay for your tax dues is a serious offense and you may end up losing your home, vehicle, and even your paycheck . . .
Posted on
October 6, 2009
at
10:19 pm
i have a debt settlement and the IRS question...what are the qualifications to qualify for settling or making a payment arrangement with them?
Posted on
October 6, 2009
at
11:39 pm
On the this offshoot on the topic of debt settlement and the IRS:It is indeed important to be able to take care of any unsettled dues with the IRS. A huge degree of risk is involved in the event that a consumer isn't able to take care of their tax debt. If you have any dues with the IRS you need to set up a payment plan with them as immediately as possible.Some of the eligibility factors for a payment plan with the IRS include having a tax debt of less than $10k, as well as bearing a good payment record with them for the past five years.
Posted on
October 19, 2009
at
3:08 am
Aside from that, if you want to settle your debt with the IRS, you can qualify if you haven't made a prior application for an Offer in Compromise, which is what this method is called.
