If you have credit cards with high balances and you’re trying to get some of that debt “forgiven” or “cancelled,” it’s possible you have to pay for it after all. That’s the case if Form 1099-C arrives in your mail box.
If a creditor agrees to lower you original debt by at least $600, it’s considered income and you are responsible for paying taxes. However, if you don’t have the money to pay back the debt, you have options.
You won’t get a 1099-C if you’ve arranged for a Creditor to lower your Credit Card Interest Rate, but you still plan to pay back the full amount of the debt. Tax experts say Form 982 is a way to prove you can’t pay back your credit card debt.
Consumers with questions can call the Fair Credit Foundation at 800-351-4195 or visit www.faircredit.org for more information. The Internal Revenue Service or a tax professional can also offer more details. The Better Business Bureau can help you find reputable agencies to assist with your debt problems.
The IRS is non-partisan.
If stock you owned went up in value dramatically, you were taxed out-of-pocket for the difference, even though you had not sold the stock and realized the capital gain. If the stock went back down and you had already paid, there was no refund.
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