If someone іѕ paying аn 18% tax rate οn a credit card debt аnd thеn take out a loan tο pay οff thе debt (аnd pay 10% interest)…dοеѕ thіѕ debt consolidation need tο bе reported іn grοѕѕ income whеn filing уουr taxes?
Tags: consolidation, Debt, gross, income, reported
there is no income here.
All you are doing is changing creditors.
only if you eventually get a 1099 c would it ever be considered income to you
No. This is not income, taxable or otherwise.
No. Debt that you continue to owe (even if a different loan) is not part of your income. However, if they forgive or cancel any of the debt, you do have to report that in gross income.
No, debt consolidation at a reduced interest rate doesn’t need to be reported as income. It’s the same as if you refinanced your mortgage at a better rate. You wouldn’t owe any taxes just because you got a lower rate.
You only have a tax liability on any FORGIVEN portion of the debt you owe. You would receive a 1099 form from the creditor if you were in this position.