Help-Bankruptcy and Income Tax

[bnkruptintexas]

Okay, I called the IRS today with a simple question and I ended up being told all kinds of things that are really disturbing me. The woman I spoke with told me that all of the debt that was discharged in my bankruptcy (which happened this month) is considered income and that the credit card companies, etc. will be sending me a 1099-C form. Now, we discharged about $80,000 in debt and now they're telling me I have to include that as part of my income???? I thought that bankruptcy protected me from this happening. I am confused. Please advise me on what I should do as I could not imagine having to pay taxes on that much extra income.

 

[bigun]

BS. Go to the IRS website and in the search function type in 1099C. Or, do a google search using the term 1099C.
They'll have several articles telling you that while you may get a 1099C, if the debt was discharged in bk, you have no tax liability.

 

[bnkruptintexas]

Thank you bigun! I did find the Publication 908 that says that income discharged in bankruptcy cannot be included as income. I am breathing a sigh of relief now. My simple question that I called to ask them was not answered however, so maybe someone here can help.

I had a Private Education Loan that I took out thorugh Wells Fargo several years ago. It was discharged in my bankruptcy at the beginning of January. I received a 1098 form from them for the interest I paid before filing. Is that interest tax deductible even though it ended up being discharged? The gentleman I spoke to with the IRS said he found nothing that says I can't, so I took down his ID # and everything for my records. Has anyone else ever encountered this problem?

 

[bk05]

Tax Question

Thank you bigun! I did find the Publication 908 that says that income discharged in bankruptcy cannot be included as income.

So should you still report it on your taxes?

 

[Ladynred]

You know, the really STUPID thing about calling the IRS is that they often DO NOT know the answers - or will give you wrong information. I've run into this more than once myself and a friend of mine who runs her own H&R Block Office says the same thing. Your best bet is to call either a tax attorney or a CPA who specializes in taxes, they WILL know the answer and if they can't answer it off the top of their heads they can get you the right answer.

 

[sapphire]

Help-Bankruptcy and Income Tax Reply to Thread

I thought all student loans were now NON-DISCHARGEABLE, but evidently not.

 

[Ladynred]

NOW, yes, because of the new law that went into effect on 10/17/05. Prior to that it was possible to get PRIVATE loans discharged, though not easy even at that.