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Cards in collections? -details inside-?
Lately the collection agencies are telling me if i settle my debt to half they will have to report this to the IRS and when looking this up i would have end up paying the money when tax time comes around next year?
I know about settlements but if this is the case, how much would i have to pay the IRS next year? Sofar i have to settle $10k worth of credit cards (5) and one more that is closed but i guess i will deal with them later. I am just a bit confused if someone can clarify this for me it would be great thank you!
2 Answers
- ?Lv 78 years agoFavorite Answer
All you pay is taxes on the write-off like you would on your income.
Basically nothing compared to the advantage of them writing this amount off.
Are you in the 15% bracket? - nothing.
- SlickterpLv 78 years ago
You pay b/c the money you borrowed and didn't repay is income to you and taxed as such.
They gave you money, you did not repay it. That is income to you.
