You filed a bankruptcy and you have now received a 1099C from a creditor.\u00a0 It shows that the debt you had with that creditor is income.<\/p>\n
Do you have to pay taxes on the amount shown on the 1099C?<\/p>\n
The answer is no, you do not have to pay taxes for this 1099C.<\/p>\n
The reason the creditor issues a 1099C to you is that\u00a0when a creditor compromises a debt or writes off a debt, the Internal Revenue Service will ordinarily treat the money you did not have to pay to the creditor as income.<\/p>\n
Unfortunately, many tax preparers are unfamiliar with bankruptcy laws and do not realize that this debt was discharged in a bankruptcy.<\/p>\n
A 2011\u00a0revision to Section 108 of the Internal Revenue Code clarifies that discharged debt is not income for tax purposes.<\/p>\n
Your tax preparer only needs to attach IRS Form 982 <\/a>to your return to deal with this issue.<\/p>\n <\/p>\n \nby Kevin Gipson<\/a>, New Orleans, Louisiana bankruptcy lawyer.<\/p>\n","protected":false},"excerpt":{"rendered":" You filed a bankruptcy and you have now received a 1099C from a creditor.\u00a0 It shows that the debt you had with that creditor is income. Do you have to pay taxes on the amount shown on the 1099C? The … Continue reading