{"id":2156,"date":"2011-11-11T09:35:50","date_gmt":"2011-11-11T14:35:50","guid":{"rendered":"https:\/\/nybankruptcy.net\/main\/?p=2156"},"modified":"2018-11-27T04:42:49","modified_gmt":"2018-11-27T04:42:49","slug":"4-steps-to-escape-paying-income-tax-on-discharged-debt-in-new-york","status":"publish","type":"post","link":"https:\/\/nybankruptcy.net\/main\/4-steps-to-escape-paying-income-tax-on-discharged-debt-in-new-york\/","title":{"rendered":"4 Steps to Escape Paying Income Tax on Discharged Debt in New York"},"content":{"rendered":"

Receiving a discharge from the bankruptcy court \u00a0in New York iis the goal of New York bankruptcy petitioners. It should be a relief so that people can continue their lives. Although, occasionally creditors claim the loans you discharged are forgiven instead, meaning you\u2019ll have to pay income tax on the forgiveness.<\/p>\n

What does this mean from your perspective?<\/p>\n

When a creditor forgives a loan with a value greater than $600, it must send you a Form 1099-C for you to send to the IRS. Sometimes the forgiven sums can be quite substantial, such as a deficiency in a mortgage or a large amount of credit card debt. This situation is similar except discharge and forgiveness aren\u2019t the same thing. Forgiveness is a voluntary act on the creditor\u2019s part, but discharge means that your debts are no longer enforceable by operation of law. Now the bank is claiming discharged debt is forgiven, and it sent you the 1099-C form to prove it. What do you do?<\/p>\n

(1) \u00a0Do not panic. This debt has been forgiven, not cancelled.
\n(2) \u00a0Next step, contact the bank to see if it will admit it made a mistake. This may take a while, but sometimes banks can get their acts together.
\n(3) \u00a0Submit IRS Form 982 [http:\/\/www.irs.gov\/pub\/irs-pdf\/f982.pdf] with your tax return to the IRS. Form 982 is self-explanatory, \u201cReduction of Tax Attributes Due to Discharge of Indebtedness.\u201d
\n(4) \u00a0Check box \u201c1A,\u201d fill in the amount that was discharged in \u201cline 2,\u201d and complete the rest of the form as necessary.<\/p>\n

These simple steps should clear up the problem.<\/p>\n

For more questions about discharged debt, forgiven debt, bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact <\/a>experienced Brooklyn bankruptcy attorney Brooklyn NY<\/a>\u00a0Bruce Weiner for a free initial consultation.<\/p>\n","protected":false},"excerpt":{"rendered":"

Receiving a discharge from the bankruptcy court \u00a0in New York iis the goal of New York bankruptcy petitioners. It should be a relief so that people can continue their lives. Although, occasionally creditors claim the loans you discharged are forgiven instead, meaning you\u2019ll have to pay income tax on the forgiveness. What does this mean …<\/p>\n

4 Steps to Escape Paying Income Tax on Discharged Debt in New York<\/span> Read More \u00bb<\/a><\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"default","ast-global-header-display":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"default","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":""},"categories":[16,126,22],"tags":[],"acf":[],"yoast_head":"\n4 Steps to Escape Paying Income Tax on Discharged Debt in New York<\/title>\n<meta name=\"description\" content=\"Receiving a discharge from the bankruptcy court \u00a0in New York iis the goal of New York bankruptcy petitioners. It should be a relief so that people can\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/nybankruptcy.net\/main\/4-steps-to-escape-paying-income-tax-on-discharged-debt-in-new-york\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"4 Steps to Escape Paying Income Tax on Discharged Debt in New York\" \/>\n<meta property=\"og:description\" content=\"Receiving a discharge from the bankruptcy court \u00a0in New York iis the goal of New York bankruptcy petitioners. 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