If I am issued a 1099C, can the creditor still place a derogatory remark on my credit report? This is provided I claim this debt release as income and pay applicable taxes, of course.
2007-11-07 12:08:25 · 3 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
Just because a creditor states that the debt is no longer collectible, doesn't mean that they can't report this to the credit bureaus.
If I'm not mistaken, the IRS will get a copy of the 1099C, too. So don't expect to evade the IRS for too long without reporting it or disputing it in some way.
2007-11-07 12:15:43 · answer #1 · answered by Jonathan B 4 · 0⤊ 0⤋
Of course they can! They wrote off the debt so your credit record takes a hit.
The taxability of the forgiven debt is a totally separate and distinct item; one has nothing to do with the other. Your paying the tax on the forgiven debt doesn't put 10¢ in the creditor's pocket torwards the written-off debt.
2007-11-07 20:16:36 · answer #2 · answered by Bostonian In MO 7 · 0⤊ 0⤋
Yes, it will go on your credit report. You may be able to avoid paying tax on the debt discharge is you can prove you are insolvent or bankrupt (your total liabilities exceed your total assets).
2007-11-07 21:26:06 · answer #3 · answered by taxmannyc 3 · 0⤊ 0⤋