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Old debt, New Tax Laws

Have you ever been issued a credit card that was charged off due to non payment?  Did you know that a charged off credit card balance is considered taxable ordinary income, according to the IRS.  Charged off credit card debt that is either canceled or forgiven may cause taxpayers to receive a 1099-C.  A 1099-C is a tax form issued to taxpayers if they incur $600 or more in canceled or forgiven debt.  The issuing company must be applicable entity which includes a: financial institution, credit union, federal government agency or a money lending company.  Read the rest here.

 

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2 Responses to “Old debt, New Tax Laws”

  1. Hmm I guess i never really thought of that. It makes sense though. My brother had a charge off of one of his student loans. I dont think he ever got a 1099 though.

    • avatar Lorillia says:

      Usually those 1099-C debts are reported by credit card companies, student loan servicers don’t bother. Because they know their debts are not discharged in bankrucpty and they have superior status to collect on them. For example take your tax refund etc.

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