Comments on: Settling a debt, does the IRS tax you on the total amount settled or individually? http://howtogobankrupt.org/settling-a-debt-does-the-irs-tax-you-on-the-total-amount-settled-or-individually.htm Mon, 06 Feb 2012 00:00:45 -0500 http://wordpress.org/?v=2.8.6 hourly 1 By: Wayne Z http://howtogobankrupt.org/settling-a-debt-does-the-irs-tax-you-on-the-total-amount-settled-or-individually.htm/comment-page-1#comment-3998 Wayne Z Fri, 27 Nov 2009 12:18:48 +0000 http://howtogobankrupt.org/settling-a-debt-does-the-irs-tax-you-on-the-total-amount-settled-or-individually.htm#comment-3998 Cumulative total of all debt settled (subject to insolvency limits). The $600 is the minimum for the debt holder to send the 1099C. It has nothing to do with how much is taxable on your return. For example, if 2 creditors wrote off $400 and $700 respectively, you would only receive a 1099 for $700 but, assuming that you were not insolvent, you would have $1100 in taxable income. Cumulative total of all debt settled (subject to insolvency limits).

The $600 is the minimum for the debt holder to send the 1099C.

It has nothing to do with how much is taxable on your return.

For example, if 2 creditors wrote off $400 and $700 respectively, you would only receive a 1099 for $700 but, assuming that you were not insolvent, you would have $1100 in taxable income.

]]> By: chatsplas http://howtogobankrupt.org/settling-a-debt-does-the-irs-tax-you-on-the-total-amount-settled-or-individually.htm/comment-page-1#comment-3999 chatsplas Fri, 27 Nov 2009 12:18:48 +0000 http://howtogobankrupt.org/settling-a-debt-does-the-irs-tax-you-on-the-total-amount-settled-or-individually.htm#comment-3999 If you are forgiven your debt, you owe tax on that amount. Each debt that is partially forgiven engenders tax liability for you. No escape clause due to amount for your obligation to pay tax on it. The creditor however, does not have to issue the 1099C for amounts under set limits. If you are forgiven your debt, you owe tax on that amount. Each debt that is partially forgiven engenders tax liability for you. No escape clause due to amount for your obligation to pay tax on it. The creditor however, does not have to issue the 1099C for amounts under set limits.

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