카드빚 못갚으면 세금내야 한다는 것이 무슨 말인가요?

카드빚을 못갚고 있는데 1099-C 가 와서 세금보고를 해야 한다고 하네요. 1099-C 는 무엇이고 면제받는 방법도 있다는데 무엇인가요?

답변:

아래 글을 참조하세요.

What is the 1099-C?

If you have settled unsecured credit card debt, you should be prepared to receive a statement from the company for the forgiven portion of the debt the following tax year. The part of the debt that is forgiven will be counted as income that you must report to the IRS.

It is unlikely that you’ll be successful in negotiating this away, but there is a way around it, using Form 982. I know of one case of successful resolution where the debtor did not receive one statement from any of the banks he settled with.

The Insolvency Exemption

The IRS considers $600 or more of forgiven debt as taxable income.
They do provide an insolvency exemption, which is calculated at the time of the debt settlement, based upon your assets and debts. And in the worst case, if you are impoverished, the IRS will not require you to pay taxes.

Note that this last is different than the insolvency exemption, which only takes into consideration assets and debt at the time of settlement. So, even if you are working and collecting a paycheck, you can be insolvent according to this exemption.

If you cannot use the exemption and can’t afford to pay taxes on the forgiven debt, your account may go into uncollectible status.  Unlike taking the insolvency exemption, this does not remove your tax obligation, but it will halt any attempts to collect it until your situation improves.

According to the IRS, if you are insolvent at the time you reached a settlement with the creditor, meaning that you owed more in debt than you owned in assets, than you can off-set the amount on the 1099-C up to the total amount which you claim you were insolvent.

For example, if you had $60,000 worth of debt, and you settled with that company for half, you would receive a 1099-C for $30,000. You need to prove that you were insolvent, or had a negative worth equal
to or greater than $30,000, in order to not pay taxes on any portion of that forgiven debt.

Add up the amount that you have in savings, checking and IRA accounts, as well as assets you hold in the form of a house, automobile and other personal items that might have any value. Make sure when you are
looking at the value in a home, you take into account a recent fair market value, as the real estate market has changed in the last few years. Say that you come up with assets totaling $15,000. Since you owed $60,000 to begin with, and your assets were only $15,000 you had a negative net worth of $45,000. Since that exceeds the $30,000 you see on the 1099-C, you easily fit the exemption, and will not have to pay taxes on your forgiven debt.

It’s possible that you might have to pay taxes on a portion of the forgiven debt. For example, if all your assets totaled $40,000, and you owed $60,000, you have a negative worth of $20,000. Now, your 1099-C says that you got $30,000 in forgiven debt. So, you are $10,000 short and would need to pay taxes on that remaining $10,000. In this case, you were able to reduce the amount.

Taking a look at another example, if you had substantial equity in a home–perhaps $55,000, and an additional $10,000 in other assets, you would have a total net worth of $65,000. Since you owed $60,000, your net worth is now positive–and you could not deduct any amount from the 1099-C. Therefore, you are  liable for taxes on the full amount that was forgiven (in this example, $30,000).

You would need to perform this calculation for each debt that you have settled, since you may be dealing with several creditors. Use the date the settlement is due, and not when the agreement is reached. If you will be making several payments, use the date of your final payment.

You should utilize the services of a tax professional when filing your taxes to be sure you are doing your taxes correctly. In every case, you’re still making out better by settling on your debts and paying any taxes that may be due, rather than attempting to pay the full amount of the original debt.