A common question among our debt settlement clients: Will I owe taxes on settled debts? Often Not! The following article provides details to those who might be eligible for an exemption.
The good news is it’s not too late to claim the exemptions as far back as the 2008 tax year. In our practice negotiating credit card debt, we often counsel our clients to seek the advice of a professional tax adviser to help determine what, if any, tax consequences they incur as a result of a debt settlement. This article does a fine job of discussing the difficulties of amending a return, especially in states that require a state tax return such as California. Individuals that have realized a significant amount of debt relief through a settlement should seek the advice of a tax professional. They do this all the time and can give you a fair assessment of whether to amend prior returns as well as advising on the current tax year return.
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