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.
In certain circumstances, however, the debtor is considered insolvent and exempt from having to report the forgiven debt to the IRS. In order to be insolvent, a person’s removed debt has to sum up to more than his or her total assets. It is clear to see that paying taxes on removed debt is the better choice over having to pay the original amount in full. Using a debt settlement company can save the client up to 75% of their total debt. This is just another reason using a debt settlement company is the best choice.
Here at Debt Aid Processing, we are committed to providing our affiliate companies with the support and resources they need to provide the best results for their clients. As one of the largest and most successful companies specializing in debt settlement backend processing, we know what it takes to get the desired outcome for our affiliates. For more information, call us today at (800) 510-2734 or visit our website at www.debtaidprocessing.com.
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