Debt Negotiation Advice
Will I have to pay income taxes on savings after a debt settlement program if income is low?
I am having to go through a program with a reputable debt settlement company and I understand I will get a 1099 at the end of the year after settlements are completed. I have extremely low income and was wondering if I would have to pay taxes on the savings?
Public Comments
- The amount of forgiven debt will be treated as income and reported to you on a 1099-C. It will be combined with any other income you have and is subject to regular income tax. In all likelihood, you can expect to pay approximately 15% of the forgiven debt in taxes. However if your total income, including the forgiven debt, is less than $5,700 (which is the standard deduction amount), you will not be subject to income taxes.
