Debt settlement and taxes I am a US citizen living abroad. As such, I am exempt from paying US taxes, as long as my income does not exceed $85K or so, though I still have to file each year. This year (2015) I have the chance to settle a long standing debt. The total debt is about $30K. The company is willing to settle for about $8K It originally was credit card debt - the debt was accrued partly in the US and partly abroad, by a US bank. As I understand it, the $22K that I will not have to pay will be considered income. When filing for 2015, I will still be considered an "expat" and will be able to file as I have in the past.
My question: how will this affect my "filing status" this (2015) tax year? Is this $22K considered income earned in the US or will I be able to add it to the income earned overseas since I have lived the required number of days abroad? Will I still be able to file as I have in the past, but add the $22K to my income? Or do I have to file as two sets of taxes? My income for this year will be about $50K, so even adding the $22K to it will keep me below the radar ($85K).
Last edited by pengyou : 07-19-2015 at 12:58 AM.
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