I filed chapter 7 bankruptcy at the beginning of this year. Most of it was credit cards. Will the amount that was discharged be considered income and will i have to pay taxes on that amount when filing my 2006 income tax return. I also reside in Alabama, if that means anything.
2006-12-29 09:49:23 · 7 answers · asked by wabbit_1444 1 in Business & Finance ➔ Taxes ➔ United States
Some creditors will send you a 1099 Cancellation of Debt.
http://www.irs.gov/pub/irs-pdf/f1099c.pdf
Check box number 6 indicating the debt was included in bankruptcy. I am not too sure about taxes, but you may have to send a copy of your Discharge Order and a copy of Schedule F or your mailing matrix showing the debt was included. Check with your tax preparer about submitting additional documents.
2006-12-29 14:13:01 · answer #1 · answered by Anonymous · 0⤊ 0⤋
I don't know for sure about the Alabama taxes, but bankruptcy is under federal statutes as is federal income tax. What was discharged isn't considered income by anyone and is debt you don't have to pay. Companies who had to write off your debt can claim it as a loss on THEIR taxes.
2006-12-29 09:53:57 · answer #2 · answered by Anonymous · 1⤊ 0⤋
No. Your discharge of indebtedness in bankruptcy is not considered income and you do not need to pay income tax on any discharged portion.
2006-12-31 10:12:48 · answer #3 · answered by woodluvto 2 · 0⤊ 0⤋
Debt forgiveness is considered income to the person whose debt is forgiven. If you receive a 1099 from the creditor for 2006, then you will need to report it on your tax return for 2006.
2006-12-29 14:12:02 · answer #4 · answered by jseah114 6 · 0⤊ 1⤋
Normally, discharged debt is considered income to the borrower, but in this case since it went through bankruptcy, I don't believe so. The court would send you documents if there is something to report.
2006-12-29 09:54:11 · answer #5 · answered by feanor 7 · 1⤊ 1⤋
I practice bankruptcy law in California. While debt forgiveness is taxable under under most circumstances, debt relief obtained in bankruptcy is NOT taxable income.
2006-12-30 15:49:59 · answer #6 · answered by Carl 7 · 0⤊ 0⤋
SS money are considered earnings with the aid of ability of the IRS and that they might desire to checklist. in the event that they simply get SS money then they optimum probable did now no longer make sufficient to might desire to pay any taxes, yet they are although required to checklist. It sounds loopy and useful even stupid, yet they do. some retired human beings make a large style of money from particularly some sources, and if after it is all added mutually they make sufficient to pay taxes, then they might desire to pay. Your mum and dad can get in difficulty for now no longer submitting in spite of in the event that they do now no longer owe taxes, so tell them to checklist. they might might desire to desire to speak with a tax preparer to make matters extra helpful out and get caught up with the filings they might desire to do to conceal the years that they did now no longer furnish some thing in. The IRS could make matters complicated for them in the event that they do now no longer %. to checklist even on an identical time as they do now no longer make sufficient to might desire to pay. they gained't get the "refund" which could be sent out in might desire to or June in the event that they have not filed, and in the event that they do now no longer, it would desire to be an extreme priced lesson for them.
2016-11-24 23:41:26 · answer #7 · answered by richeson 4 · 0⤊ 0⤋