Posts Tagged ‘insolvent’

What is Forgiven Debt?
Monday, March 8th, 2010

After a debt settlement company has negotiated a reduced debt balance on behalf of their client, it is the client’s responsibility to report the amount of debt removed to the IRS.  According to IRS Publication Form 982, any amount of removed debt above $600.00 must be reported as taxable income.  This means that the creditor whom the debt was owed to has to provide the debtor with a 1099-C tax form which clearly states the amount of removed debt.