Writing Off Bad Debt

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Writing Off Bad Debt

JeanLorie Rep Points: 545

Posted on December 8, 2007 at 1:34 pm

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?

sandalwood Rep Points: 2,085
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Posted on December 9, 2007 at 6:22 pm

Stephanie, Great resource. Surprisingly it was also easy to understand. The IRS isn't particularly known for its clear writings. Tom

simplyme112586 Rep Points: 295

Posted on April 7, 2009 at 2:15 pm

wow.. if i'm the debtor i would be very happy.. I do account or recognize bad debts depends on the aging of receivables & policy of the company..