As tax season begins so does the stress of filing for many Americans. Depending on your current financial situation, submitting your information for review can be an anxious time as individuals await the results of their return. While many will receive a refund, as a result of paying in too much tax over the course of the past year, others will be required to pay some amount to make up for the difference. If your current income levels match previous years, then an amount, whether it be owed or a refund, similar to past filings can be expected. However, there are others who have had their income levels change, switched jobs, or had other variances in their financial situations which could cause the results to be different.

The average American debt is nearly $100,000 and an ongoing coronavirus pandemic has only increased these amounts. Fortunately, there are plenty of programs designed for individuals to manage their money including opportunities to be forgiven for amounts owed. Depending on your situation and lender - payment plans, cancellation, and forgiveness may all be available options. While this may initially offer a reprieve, there could be tax implications.

Debt

There are many instances where individuals accumulate debt. From purchasing a home to getting groceries, people sometimes have opportunities to use other sources of money for their expenses. This money then becomes owed to another entity and results in debt. Credit cards are another way debt is quickly accumulated and should be monitored closely in order to avoid getting into a situation where you need some type of forgiveness service. 

Forgiveness

Debt forgiveness and cancellation may occur for a variety of different reasons. If collection services are stopped or an agreement is reached to pay a sum smaller than that owed, the remainder is then typically not due. A 1099-C form should be received for any amounts forgiven in excess of $600.

Income

In certain situations, this leftover amount may not be relevant but generally it is considered income by the Internal Revenue Service (IRS).

Impact

Additional income can have an impact on your taxes, in addition to not reporting the forgiven debt. If you have received some type of debt forgiveness, then ensuring that your taxes are filled out appropriately with all of the correct forms is extremely important.

If you are in need of assistance with debt consolidation or tax prep with forgiveness forms the accounting experts at Bloch Rothman and Associates can assist you or your business today. In addition, they can also take care of multiple other issues dealing with paying or owing back taxes, required audits from other entities besides the IRS, or any other personal or corporate wealth management issues. Along with providing a quality tax service, our group can also complete tax returns or answer any other factors associated with financial issues or concerns you may have. Serving in Denver and all of the surrounding areas for 35 years, our firm has an extensive history in helping clients with any and all of their tax issues or dealings with the Internal Revenue Service. If you have questions about your personal, business, estate or any other filings, don’t hesitate to contact us today. Available for all of your tax needs and filings, there are also a number of bookkeeping and payroll services offered to assist you and your business. We look forward to meeting you and serving whatever your needs may be soon!