I was able to negotiate a payoff with one of my creditors. Why did I get a 1099 from them?
Perplexed in Pewaukee
When you were successful in negotiating a smaller payoff from your creditor you, in essence, created a revenue stream for yourself. The forgiven debt is therefore considered income, and should be listed under the “other income” section on your tax return.
However, if the debt had been discharged in a bankruptcy it would not be a taxable event.
Disclaimer & disclosure: I’m not an accountant, this comes from my personal legal experience only. Please seek the help of qualified Accountant to help you with your personal situation of if you ahve any further tax related questions
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