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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
Satisfied Customers: 585
Experience:  10 years experience
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MY NAME IS ***** *****. I DEFAULTED ON A NYCERS LOAN DUE

Customer Question

HI MY NAME IS ***** *****. I DEFAULTED ON A NYCERS LOAN DUE TO BECOMING PERMANENTLY DISABLED BY A JOB ACCIDENT. IS THE OUTSTANDING AMOUNT TAXABLE AS REGULAR INCOME OR CAN IT BE CONSIDERED A LUMP SUM DISABILITY PAYOUT?
JA: Thanks. Can you give me any more details about your issue?
Customer: THAT'S BASICALLY IT, MY EMPLOYER DEEMED ME PERMANENTLY DISABLED AND I AM NOW TO RECEIVE A NYCERS RETIREMENT PENSION.
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Submitted: 1 year ago.
Category: Tax
Expert:  MequonCPA replied 1 year ago.
The default is considered to be a cancellation of debt "COD" as such it is taxed as ordinary income. If you are unable to pay the tax in full, you may be able to set up an installment agreement. Additionally, if you can prove to the IRS that payment is a financial hardship they may accept an offer in compromise for an amount less than you actually owe.