Ad Disclosure

The Surprise Taxable Income

Written by:

AmONE

Edited by:

Kristin Marino

Updated on June 19, 2023

debt settlement terminology If you’ve had a debt settlement last year, you can expect to receive Form 1099-C from the Internal Revenue Service (IRS).

This is because under current IRS regulations the amount that you saved by entering into a settlement agreement with a creditor or a debt collector is considered to be taxable income. If the amount you owed was reduced by $600 or more, you’re required to report that amount to the IRS.

Unfortunately, this may come as a surprise to many people who don’t realize that the money they didn’t receive from a debt settlement is taxable income. That savings can be a tax liability and the amount you owe on the balance reduction is based on your tax bracket.

There are certain kinds of debt forgiveness that are exempt from federal taxes. You should consult with a tax professional to ensure that you are paying the taxes you’re required to by law and that you don’t run into any post-April 15th surprises from the government.

According to CNBC, the IRS expects to receive 6.5 million of the Form 1099-C, Cancellation of Debt document this tax season, so if you benefited from a debt settlement in 2012, be on the look out for this form in your mailbox. For more information about debt settlement programs, contact AmONE today.

Ad Disclosure

Advertiser Disclosure*. The financial products and services on this site are from advertisers from which AmONE receives compensation. Compensation may be based upon whether you click on certain links on this site or buy products or services from those advertisers. We do not receive compensation from consumers. The placement of advertisements on this site are based in part upon the compensation AmONE has or expects to receive from those advertisers. Placement of advertisements does not reflect our recommendation of any advertisers' products or services. Please consult a financial services professional before making any financial decisions. Our advertisers do not include all the financial products and service providers available in the marketplace.

Loan availability, rates, APRs (Annual Percentage Rate), and other terms vary by advertiser and borrower attributes, including borrower location. Lenders have a range of available APRs; only borrowers with excellent credit will qualify for the lower rates. As of 01/11/2024, our advertisers were offering loans to some consumers for as little as a 6.40% APR on a three-year $100,000 loan.

We do not provide financial products or services. Rather, AmONE provides administrative and marketplace services by attempting to connect consumers with service providers offering products and services such as debt settlement and personal loans. We do not take applications or make credit decisions. We may not be able to match you with any of our advertisers. Credit and other decisions and terms are determined by our advertisers based upon the consumer's submission of an application to the advertiser, which may obtain other information about the consumer from third parties. Approval for financial products and services by an advertiser is not guaranteed.

Get matched to your perfect loan and level up your money game.

Find My Loan

Ready to up your money game?

See my loan options

Why AmONE is Trusted By Millions for Their Loan Needs

Anyone can put together a group of lenders in a marketplace to offer people loans. We go beyond that. We not only partner with some of the best lenders around (like Citi, Rocket Loans, SoFi and so many more), we also work with partners who can help people like you go beyond a one-time loan. We connect you with the money programs you need to help you get real financial solutions in place that allow you to tackle your debt and money problems so you can move forward. Getting out from under debt to financial freedom is daunting and we're ready to help you every step of the way.

AI is the hottest thing around right now, but we know from our decades of experience in the personal finance space that the last thing someone wants to do is talk to a robot when they need real answers. Solving money problems can be stressful and daunting, so don't settle for generic responses and information that offers little real financial insights. Speak to one of our many support specialists who all work from an AmONE office right here in the U.S. and get the answers you really need to make better financial decisions.

We work hard to find loan offers for even the most challenging financial situations. With our large lender marketplace, we know we give everyone the best shot at getting the loan, debt and credit help they're hoping to find. Even when someone's credit is clearly poor or they hold a large amount of debt, we still get our customers in front of lenders to give them the best shot at securing the funds they need. When the unexpected happens and customers are rejected for loans, we still work with them to find other financial solutions that put them on the path to financial recovery so they can keep moving forward toward their money goals.