Posted on
November 11, 2009
at
10:30 pm
SO I settled my debt just recently and was informed that I had to submit an IRS cancellation of debt form? What's the deal with that?
Posted on
November 12, 2009
at
12:22 am
An IRS cancellation of debt form will be given to a consumer either because the debt has been settled (which was, as you mentioned, what you did), or if the debt has been deemed noncollectable by your creditor. In your case, which is a settlement, the form serves as a notification to you that your creditor will "write off" the unpaid portion of the debt that they forgave. This forgiven portion should at least be $600 or higher.
Posted on
November 12, 2009
at
1:42 am
The IRS cancellation of debt form should be provided by your creditor, and must be submitted within a specific time period. Unfortunately I do not have the information with me on hand, so can someone please verify this?Basically this form also informs the IRS that the information you noted on it is taxable income.
Posted on
November 12, 2009
at
1:50 am
Can I use the IRS Cancellation of Debt form for ALL my debt? Or just towards specific ones?
Posted on
November 12, 2009
at
2:16 am
Josh, are you asking if the 1099-C IRS cancellation of debt form is applicable for all debts? The IRS actually honors certain situations wherein a canceled debt need not be reported as income. One of the situations wherein you need not report any canceled debt to the IRS is if you have reached the state of insolvency. That means your total debts exceeds the amount of assets that you currently have.
Posted on
November 12, 2009
at
2:55 am
You're also not required to report any bankruptcy discharged debts on your IRS cancellation of debt form.Also, if the debt was treated as a gift and was, in effect, discharged. Though this exists only in extremely rare cases.
Posted on
November 12, 2009
at
3:04 am
Also applicable for indebtedness due to what is considered a "qualified" farm expenses, as well as being in debt due to business losses from real property.
