Any debt over $600 that is forgiven will be issued a 1099 by the creditor. For example, if your debt was $20,000 and you reached a settlement of $12,000, then the forgiven debt is $8000. However the IRS will often waive this tax liability if you prove that you were insolvent during the time in which your debt settlement occurred. Many of our clients are able to prove insolvency since their debts are more than their assets.
Watch our video about debt settlement and how it effects your taxes.
PCS Debt Relief does not handle taxes. It is important to talk to your tax accountant upon receiving a 1099 to see how it will affect your taxes and for more information.
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