If you were able to cancel debt last year (either through settlement, forgiveness, or modification) — congratulations! You must feel relief in knowing that you are starting fresh in 2016.
While you may be breathing easy with your old debt off your shoulders, many of you may already be thinking about taxes which are due to the Internal Revenue Service (IRS) no later than April 15th. At the date of this posting, that’s still three months away which means you have plenty of time to prepare your taxes but, if history is any indicator, preparing early is best. You never know what can happen in three months and you do not want to risk being late.
If you are one of those people who was able to cancel debt last year, it’s very important you file your taxes correctly to reflect that information. The IRS considers any cancellation of debt aTAXABLE event, meaning that it is to be reported as income. This could mean a very large tax bill. However, there are certain exemptions and manners in which to avoid these taxes, if your tax returns are completed properly by knowledgeable tax professionals.
Because we work with so closely with our clients on issues of foreclosure, bankruptcy, and other financial services that often lead to the cancellation of debt, we are very familiar with these tax issues, and can assist you in properly reporting, and in most cases, avoiding, tax consequences pertaining to cancellation of debt.
We are always happy to assist you to ensure your tax forms are prepared correctly and on-time – Contact us at 1-800-LA FIRMA or book your free consultation by clicking below concerning any issues you may have regarding your taxes this season.