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Article Date:
November 2010


Word Count:
454

 

 

Income Tax on Debt Relief


Question

 

We turned over $40,000 in debts to a debt-relief group that helped us in two ways:

 

1.

They got the debt reduced to $30,000 because of the outrageous interest rates charged by the credit card companies.

2.

They got us on a pay plan that works great.

 

However, we just learned that we are going to receive a 1099-C for cancellation-of-indebtedness income of $10,000. How do we get out of paying taxes on this $10,000? (T.C., Kissimmee, Fla.)

 

Answer

 

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