Does a person, who I loaned money to, and for more than a year he has not returned it, even though I have a court order granting me my money, have to pay taxes for that money to the IRS?
2007-01-25 06:46:58 · 9 answers · asked by foxtrot 3 in Business & Finance ➔ Taxes ➔ United States
Because it was a loan, he doesnt have to pay interest on it unless you cancell the debt, you would have to send him a
1099-C (Cancellation of Debt) and then he would have to claim it on the amount on his tax return as ordinary income and pay regular tax on it.
2007-01-25 06:55:27 · answer #1 · answered by emeraldsky21 2 · 0⤊ 0⤋
If the loan has been considered as unable to be paid by the courts and you have good documentation regarding the initial loan, then the IRS considers the forgiven debt to be income to the party who didn't pay the debt and either a business or non-business bad debt expense to the individual who loaned him the money. Technically, you could issue a 1099 to the person to whom you loaned money, because it is legally considered to be constructive income to the recipient.
Reality check-if you do try to deduct this bad debt expense on your tax return, the IRS most certainly will be contacting you for further details on the bad debt.
2007-01-25 06:57:15 · answer #2 · answered by SuzeY 5 · 0⤊ 0⤋
You do not have to pay taxes on a loan. Its not income, you are supposed to give it back.
2007-01-25 07:36:25 · answer #3 · answered by growing inside 5 · 0⤊ 0⤋
What are you getting at....? they're very almost paying the comparable. @Ted you assert that the gov could tax maurice to make him the comparable as Billy? you recognize what that sounds like? Fa.gism aka socialism.
2016-12-12 20:05:35 · answer #4 · answered by mckinzie 4 · 0⤊ 0⤋
No. As long as he payed taxes on it in the year he got it.
2007-01-25 06:51:10 · answer #5 · answered by Anonymous · 0⤊ 0⤋
I don't think so but contact the IRS just to be sure. If you have a court order, take it to her/his bank and put a lien on their bank account.
2007-01-25 06:52:42 · answer #6 · answered by darkdiva 6 · 0⤊ 0⤋
Yep, you only pay tax on reported income.
2007-01-25 06:51:27 · answer #7 · answered by Anonymous · 0⤊ 0⤋
no he doesn't. not income, plus he is supposed to pay it back, hope you get it back...
2007-01-25 06:51:56 · answer #8 · answered by Anonymous · 0⤊ 0⤋
no ,not really because this is not income
2007-01-25 06:50:26 · answer #9 · answered by silverearth1 7 · 0⤊ 0⤋