STGSILVER TAX GROUP
800-778-2741
Open 24 hrs / 7 Days A Week
Real Tax Attorneys For Real Tax Issues

Fast Action. Proven Results.

START WITH A FREE CASE EVALUATION

Cancellation of debt as income

It is important to remember that cancellation of a debt does not mean that your financial worries will come to an end. Any Michigan taxpayer who has part or all of their debt cancelled may nevertheless need to report this amount as income. When lenders cancel $600 or more of your debt, you should then receive a Form 1099-C providing the amount of the debt cancellation.

The IRS does provide exclusions to this cancelled debt as income. For example, there are exclusions that apply to cancellation of mortgage debt on the main home the taxpayer owns. However, such exclusion only applies to loans used in buying, building or improving upon that individual's primary property.

A loan modification may also result in savings which technically becomes income to the taxpayer. However, during such loan workouts, the IRS still may allow exclusion of that portion of the debt cancellation as reportable income. The same exclusion may also apply regarding debt savings during refinancing of a mortgage. But just as with cancellation of mortgage debt, this again only involves purchasing, building or improving upon one's primary property.

There are many forms of cancelled debt that do not receive any exclusion as reportable income for tax purposes. This can include cancellation concerning rental property, business property, credit cards and car loans.

The rules concerning cancellation of debt can prove to be complex. Mistakes made when figuring out whether exclusion occurs can result in scrutiny of your tax forms. Therefore, it is a good idea to discuss your legal options when in doubt about the legitimacy of any exclusionary claim.

No Comments

Leave a comment
Comment Information

When you hire us, we can help: you:

  • Obtain emergency relief from IRS actions
  • Stop the IRS from garnishing your wages
  • Prevent levees from being placed on your bank accounts
  • Keep tax payments and penalties from spiraling out of control

Phone Answered 24/7

We are always available to answer your questions and put your mind at ease.

Call us today at
800-778-2741 for a free initial consultation

Competitive Pricing

We offer flat fees that fit your needs and your budget.

Read Our Pricing FAQ

What Past Clients Say About Us

I know I won't be getting those frightening letters anymore thanks to Chad Silver - such a weight off my mind!” - A. Gould, Ohio

Read More Testimonials

A Real History of Success

IRS debt of $682,437, Attorney Silver and his team negotiated the Debt down to zero.

View More Results

You Can Fight The IRS And Win. We Can Help.

No matter where you are in the process, we can help you make the best of your situation. Call us toll free at 800-778-2741 for a free case evaluation.

Get A Free Consultation »
PRACTICING TAX LAW NATIONWIDE

Privacy Policy | Business Development Solutions by FindLaw, a Thomson Reuters business.

Back To Top