Taxes on forgiven debt

Hi Molly,

A debt forgiven by the lender/creditor will be considered as your income. As a result, the IRS will demand income tax on that amount.

Thanks,

Jerry

Hi Molly,

When a lender or a creditor forgives your debt, he reports it as a loss of income to the IRS. Thus, the IRS cannot claim taxes from the creditor or the lender. As a result, it becomes your income and you become liable for paying income tax to the IRS.

Thanks