Question about debt settlement and taxes?
This past year we settled on two credit cards. I am not sure the exact amounts as we were going through a debt settlement company. Anyway, I am wondering when the two credit card companies have to have our 1099 to us for our taxes. If they don’t send us one do we have to claim it on our taxes? When is the deadline for when they need to have it to us?
They must have them mailed out by 1-31-11. If you file and receive them later, then you must amend your 2010 return.
Some of your question is unclear. DID they ask to send you a 1099?
If they do, you still may not have to pay taxes on this. The creditor has the right to issue a 1099 for the difference in your original debt and the settlement amount which has been technically forgiven and considered income.
If they do send a 1099 you can file a Form 982 with the IRS which can eliminate the need to pay tax on that amount.
Debt settlements can be either fully taxable, non-taxable, only partly taxable. Even if you do get 1099-Cs, you will need to crunch the numbers to determine those amounts.
When preparing your return, you need to include any amount which is taxable. You must do that regardless of whether or not you receive a 1099-C from the credit card companies.