What they're getting at is the fact that forgiven debt is taxable
Okay so if the loan was 35000 how taxable is it
IRS sees that as a net increase in wealth (you guaranteed the payback of the dollars and it was not repaid) ... HOWEVER, the amount that is forgiven is ONLY added to your other income and taxed, the amunt of the tax DOES NOT equal what was forgiven
Depends on your tax bracket
If, for example...
you are in the 25% bracket, then it will be added to your other income and taed at 25% ... $8750 (inn that example)
(sorry fro the typos)
Do you file as married filing jointly o single? (I can pull the brackets for you)
k. just a sec
Ok id be 25%
K, then that is the worst case
There will be nothintg to report unless they actually give you a 1`099
THey COULD be trying to scare you ... is this a Private student loan?
They mentioned that I should probably file one but not sire if anyone will send me one
It was a school loan through wells fargo
it is THEIR responsibility to send the 1099 (and that's when the IRS will get a copy)
Ok so once they report it im screwed basically?
Sounds like it probably WAS a private, rather than a federally subsidized loan
(1) I would certainly wait to see if they send one ... (2)You may also want to make an offer (that would be than the tax owed, sometimes they'll take an offer in compromise (where they give you a paid in full letter as part of the settlement) (3) In the mean time, read the loan agreement (they have to provide one) to be sure that your ARE responsible in the event of death
Ok thank you
(4) If they actually do send a 1099, you won't have tp pay until the following April, you can set up an installment agreement with IOTS to pay it over time (you can do it online if the taxes owed are less that 50,000
Again, DO look at that loan agreement, sometimes there are clauses that allow for different things to happen in the event of death, make them send you that 1099 frst
Ok appreciate it thank you
The terms of many student loans provide that the indebtedness is discharged upon the death of the borrower. However, you really should check the copies of the original loan documents.