I have heard that if someone owes you money and does not pay, you can write this amount off on your taxes as a bad debt. I believe you have to send them something that notifies them you are planning to do this, and they will then have to report the loan as income on their taxes. Is there any other action a person needs to take, or is really as simple as it sounds?
Not a tax advisior but thought that a explanation about this directly from the IRS might help ya :)
http://www.irs.gov/taxtopics/tc453.html Stephanie
Stephanie,
Great resource. Surprisingly it was also easy to understand. The IRS isn't particularly known for its clear writings.
Tom
