Tax effect
Date: Tue, 04/05/2011 - 02:43
Tax effect
Can there be any effect on tax if I fail to pay credit card debt?
If you fail to pay your credit card debts and later on settle it
If you fail to pay your credit card debts and later on settle it for 40 - 60%, then there are chances that you will be liable for paying taxes on the forgiven debt as it will be considered as your income by the IRS.
Monaliza is correct if you settle and they issue a 1099-C, Cance
Monaliza is correct if you settle and they issue a 1099-C, Cancellation of Debt, that is considered income and you will need to report it on your income tax return and pay taxes on it. Before you settle it may be helpful to grab a form 1040 and pencil in the numbers to see where you might stand. Or call a tax professional.
