Bohemia, NY (PRWEB) March 25, 2013
On March 25, 2013, Rapid Recovery Solution releases a statement following a CNBC article by Herb Weisbaum reporting that the IRS considers any forgiven debt for which you saved more than $600 to be taxable income.
According to the CNBC article, if a person had a debt forgiven and managed to save more than $600 on it, they need to claim it on their tax return. Many taxpayers miss out on this fact, says the article. Debt collectors who agree to reduce the balance you owe by $600 or more are required to file a form 1099-C with the IRS, and send you a copy of the form.
The article mentions that "People tend to miss this because they didn't see any cash from the debt settlement and therefore they just assume this is not income. This puts you at risk of being audited or hit with penalties and interest." People believe that once they settle a debt, anything else they receive from collection services is trash, and usually end up throwing away their copy of the 1099-C. They eventually find out that they owe taxes on the settlement when they hear from the IRS.
The article goes on to state that the 1099-C is a complicated form. Consulting a tax professional may be the easiest way to handle it. If the information is wrong, you’ll need to contact the company and ask them to correct the form.
John Monderine, CEO of the New York-based collection services experts, Rapid Recover Solution, commented on the CNBC article. “Some people fail to realize that forgiven debt over $600 dollars is taxable income, and if they don’t claim it on their taxes, they can run into problems with the IRS later down the line. While claiming the debt as a taxable income will make you pay more on your taxes, it’s always better than having to pay the full amount of the original debt and to be on the right side of the law.”
Founded in 2006, Rapid Recovery Solution, Inc. is headquartered at the highest point of beautiful Long Island. Rapid Recovery Collection Agency is committed to recovering your funds. We believe that every debtor has the ability to pay if motivated correctly. We DO NOT alienate the debtors; we attempt to align with them and offer a number of ways to resolve not only your debt but also all their debts.