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Taxtom, Accountant
Category: Finance
Satisfied Customers: 2364
Experience:  25 Years in preparing Personal and Business Tax Retuns
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We experienced a serious financial hardship over that last

Resolved Question:

We experienced a serious financial hardship over that last two years due to a DUI and wreck. Many of our credit card companies settled our debt for less than what is owed. I know that we need to report this as income if we can not show insolvency at the time of the settlement. I have a question on one account that shows on our credit report as written off as a bad debt for 20856. They never contacted us they just wrote it off as a bad debt. Do we include this as a taxable amount? They have not sent a 1099.
Submitted: 6 years ago.
Category: Finance
Expert:  Taxtom replied 6 years ago.

Taxtom :

Hello, Just report the income from the 1099C's you received from the lenders. If you later receive another 1099C from the last account then you can always amend your tax return. Although it is shown as written off they have in effect sold the debt to a third party and someone will contact you about the debt in the future. Since that debt is not considered as forgiven it is not income to you yet. Thanks Tom Please click accept.

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