I had settled a debt with a credit card company and since this is a federal matter due to reporting a 1099-C I was wondering how much I would have pay tax wise on this Forgiven Debt? =====>it depends; Since you or a debt management company has successfully negotiated a settlement of your credit card debt, and the amount is over $600, you receive a 1099-C and unless the amount forgiven is exempt, then it has to be included on your return as additional income subject to normal taxation.as your cancelled or forgiven debt does not qualify for one of the filing exemptions, you must include the amount in Box 2 as other income on line 21 of your IRS Form 1040.If at the time of the settlement or forgiveness you were INSOLVENT, I mean your liabilities were only equal to or greater than your assets, then the amount of the forgiveness IS NOT INCLUDED as additional taxable income.
I had a 10000 debt and they forgave 6200 dollars and the rest I paid cash in. How would I figure out what I would have to pay or what would I have to pay come return time? For the year,I believe my total income before taxes will be about 12000-14000 dollars?
==>hard to tell it depends I mean, the amount of federal income tax on $6.2K depends on many factors. If I were to hazard a guess, it would be about $1550. That assumes you are in the 25%tax bracket -- in other words, you pay 25% of every additional dollar of income on your return. If your income after deductions is less than about $35K ( THE THRESHOLD changes each YEAR (about $70K if you are married and you file jointly) you may be in the 15% tax bracket. In that case, an additional $1550will only cost you about $930 in income tax.
It's never going to be exact. Many credits and deductions have limits and phase-out ranges that depend on your adjusted gross income. Perhaps the best way to determine how much it would affect you is to use tax software. You can find online software that doesn't take your credit card until you're ready to file if at all. I highly recommend letting the software do the hard work for you.
Your state income tax is generally calculated starting with your federal income tax return amounts, so don't forget to allow for an increase in state tax, too.you need to contact an Enrolled AGENT OR a CPA doing taxes in your local area for professional help.