Re: Debt written off by OC= no righ Question then, if they send you a 1099, and you have to pay taxes on the "forgiven" amount, then you later pay the CA for deletion, can you get back the taxes? Can you submit some kind of 1099 revert form? If I were given a 1099 for lets say $5000, paid taxes on it at my current rate that would be around $2000 in state and federal taxes. Because I already paid $2000 in taxes there is no way in H that I'm going to consider paying anything to any collection agency. But what if I did? What if a debt is in SOL, the original creditor charges it off, sends the 1099, and then the CA sues you and gets a judgement on you for the amount? Can you demand repayment from the government on the tax you paid on the money that they say you earned, that you then have to pay back?
Re: Re: Debt written off by OC= no righ 1: If you get the 1099C then pay the OC or CA, you do not get any abatement of axes or ability to negate the 1099C because your OBLIGATION to pay was extinguished with the forgiveness. You made a nondeductible contribution to your ex-creditor's bottom line. 2: If the debt is forgiven and a CA sues you, you have an affirmative answer in that the debt was forgiven, and the Court will throw out the suit, so the CA cannot get a judgement unless you're asleep and they get one by default. If it's outside SOL then you raise that as an affirmative defense to the suit. In either circumstance you still owe the IRS the taxes you paid on the forgiven debt no matter what.
Re: Re: Re: Debt written off by OC= no righ you still owe the IRS the taxes you paid on the forgiven debt no matter what. You would not owe tax on any unearneed interest.
Re: Re: Re: Debt written off by OC= no righ does it matter if you maintain that the amount they are "forgiving" is comprised of interest and late fees etc as opposed to consumer initiated debt?
Re: Re: Re: Debt written off by OC= no righ lacey, the irs is only interested in the amount of the forgiveness of debt. the irs doesn't care how it is comprised. in other words, irs interest is $$$$$$ only.
Re: Re: Re: Debt written off by OC= no righ Even if it's interest and late fees, it is still money that you owed and didn't pay. As far as the charge-off, a 1099 shouldn't be sent just because the creditor charged off the debt. They may still want to collect. If they're sending it to a CA, they're still trying to collect. The charge off is a separate action. When you settle for less than the amount that you owe, the difference is what is forgiven (because they've agreed to not go after you for that difference) and then you get a 1099.
Re: Re: Re: Debt written off by OC= no righ does it matter if you maintain that the amount they are "forgiving" is comprised of interest and late fees etc as opposed to consumer initiated debt? =============== Good Question
CC interest is non-deductible for tax purposes. as are late fees for CC debt. only interest related to your home (mortgage, home equity) is deductible.
CC interest is non-deductible for tax purposes. as are late fees for CC debt. only interest related to your home (mortgage, home equity) is deductible. billt1227 ======================= You are talking about interest that you have paid. The issue here is interest you haven't paid
Suppose it wasn't legit in the first place. That you only paid it to be rid of the hassle. Would you still owe taxes on the forgiven [NONEXISTENT] debt? hhmmm... ~
THAT is my question! If the charges that the cc company is trying to stick you with are questionable at best; if they have lost numerous class actions over the same sorts of charges - how can they possibly justify it as "lost income" or worse, as some sort of "income" to the consumer? It just aggravates me to no end!!!
****************************************************** NEW MEMBERS READ THIS. http://consumers.creditnet.com/straighttalk/board/showthread.php?s=&postid=410243#post410243 ******************************************************* > THAT is my question! 1*If the charges that the cc company is trying to stick you with are questionable at best; how can they possibly justify it as some sort of "income" to the consumer? 2*It just aggravates me to no end!!! Lacey ================== 1*This is the same thing as having to pay income tax on the 20,000 car you didn't buy. Since you didn't buy the car you earned 20000 dollars that you owe taxes on. 2*Yeah but it's a revenue generator for the IRS. The bad part is there is nothing stopping them from dreaming up bogus amounts due and claiming a write off and nailing you for income tax on the BOGUS AMOUNTS. The result is you get to pay tax on income you never had. In cases like this what you paid should be a tax deduction rather than what you did not pay being taxable. You actually had an income loss rather than an income gain.
Re: Debt written off by OC= no righ What if the CA claims to send a 1099, but it never reaches the debtor. Or they send a copy to the IRS, but the debtor never receives a copy. Then the debtor is left with a tax lien later for a "gain" they never knew about in the first place. This could get really hairy.
Re: Debt written off by OC= no righ Hey, is there a minimum amount difference between the settlement payment and the amount claimed due before they issue a 1099? I mean they won't think to issue one for $10 or $100.... it's not worth the hassle of the paper, and the IRS doesn't want to see amounts that small either.
Re: Debt written off by OC= no righ I am going from memory here (I am pretty sure the 1099 limit is the same as the W-2 requirement limit). Theoretically, 1099's don't *HAVE TO* be issued for $599.99 or less, the $600.00 or more is the amount that the 1099 has to be issued at.
