Just looking for information? Click below:

Debt Settlement for BeginnersFREE eBook
Debt Relief NW Inc, Credit  Debt Consolidation Services, Portland, OR



                   STOP      Collection

Stay Informed! Have updated blog post emailed to you:

Your email:

Current Articles | RSS Feed RSS Feed

Do I have to claim credit card debt forgiveness on my tax return?


Do I have to claim credit card debt forgiveness as taxable income because I had some debts settled last year? 

One of our clients had received a letter from the IRS regarding her inquiry as to the "taxable income" status of credit card debt forgiveness.

The IRS wrote:

"Claims of insolvency must be supported by quetiona listing of assets and liabilities at the time the debt was canceled.  You may include Form 982 or a simple cover letter claiming insolvency."

When you have a debt settled (or in IRS terms, "forgiven"), if the amount forgiven is over $600, the creditor may send that information to the IRS.

If so, you will receive a 1099-C form.  At first, it looks as if you will have to include the entire amount as taxable income, but if you read closely, their are exceptions!

  • The main exception or exclusion of the forgiveness as taxable is as the IRS letter stated above, if at the time of settlement you were basically insolvent, then the amount IS NOT INCLUDED AS TAXABLE INCOME.

IRS Form 4681 explains the "exclusions", and there are several, but the main one you should be concerned with is INSOLVENCY.

The form states, "Do not include a canceled debt in income to the extent that you wee insolvent immediately before the cancellation.  You were insolvent immediately before the cancellation to the extent that the total of all of your liabilities exceeded the FMV (Fair Market Value) of all of your assets immediately before the cancellation."

Unfortunately, many tax advisers and accountants are not aware of this exclusion and tell their clients that they must pay more taxes, when they shouldn't have too!

If you have had unsecured credit card debt settled last year, then you should:

  • Provide a simple financial profile of your assets vs. liabilities.  For most people, their liabilities are much more or at least equal to their net assets.
  • If your tax preparer does not have form IRS Form 982, click here for a copy.
  • A simple letter stating your circumstances at the time of forgiveness (hand written) may also help.

If you have had settlements prior to 2010, and you think you paid taxes when now you realize you shouldn't have, then contact your tax preparer with this information or contact the IRS yourself.

You may get back all of the extra tax you paid!



Decline the boot of ground 
New China louboutin shoes net Harbin gives or gets an electric shock(the reporter is strong brave)"gold nine silvers ten" as to develop a company to sprint a whole year an accomplishment extremely good on September 26 the chance has been being sent to the great and earnest hope, but adjusts to control a policy to continuously release in the building City of under the big background, local many region building City early and early"go into a winter", "gold nine silvers ten" concept ever also makes development company with buy a building the mindset take place a delicate change.The industry insider thinks that as long as one and half years building City adjusts to control and gets stripe, step aside hair the company and market suffer an unprecedented challenge.Owing to real estate profession's being a market that government and financial capital depth get involved, this declares history ascend serverest adjust to control how to deepen adjustment, will produce to influence very greatly to the next building City alignment. 
"Gold nine cheap ugg silvers ten" content shortage is difficult the heavy expectation for accepting a market 
Have"barometer in the building City" of call of the building exhibition will be in times gone by stirring to pay attention to.On the 19th, 4- days 33th merchandise in Harbin building exhibition's selling will end, the total turnover is only 319 sets and create for 3 years, Harbin building exhibition meeting the turnover is lowest to be worth. 
The current building exhibition will develop a company to release various sell at a discount to promote sales an activity, the range exceeds each formely, "special price building""bought building to present a car""bought building to send farmland""0 paid out!The civil regiment buys 8.8 fold"wait pattern to are of a great variety.In addition to minority of building dishes, the big part joined the exhibition items to all participate in a price competition. 
And take a cheap uggs wide view "gold is in September" first half distance, whole condition in building City, Harbin isn't optimistic either, the market personage widespreadly expects "gold nine silvers ten" meeting content shortage.According to statistics in house property section official site in Harbin City, up to September 18, merchandise building in Harbin sells 1867 sets and descends near 40% laster month same period.The whole building City is also always being placed in slow-moving instauration after practicing a limit to buy March, this year, with last year"the new country is ten" pedestal but market still many wells spray a circumstance different. 
Posted @ Thursday, October 13, 2011 1:56 AM by christian louboutin outlet
Well this post tell us a lot of things about Credit cards. And i know a lot of us has the idea now. Thanks for your post. 
<a href="http://www.tax-defense-network-fraud.com/ 
">network fraud 
Posted @ Tuesday, October 30, 2012 6:47 AM by Angelica
Well this post tell us a lot of things about Credit cards. And i know a lot of us has the idea now. Thanks for your post.  
<a href="http://www.tax-defense-network-fraud.com/ 
">network fraud 
Posted @ Tuesday, October 30, 2012 6:48 AM by Angelica
Post Comment
Website (optional)

Allowed tags: <a> link, <b> bold, <i> italics