What Form 8865 Exclusion 2023-2024

Hi, I'm licensed ed adjuster Damian Falcone. In this video, we will discuss something that can happen every time a debt is negotiated. This is commonly referred to as tax on a forgiven debt or discharge of indebtedness. This is Get Settled, your source for consumer debt settlement information. As always, for even more information, go to WWE and credit management .com. The IRS uses money received as income in the situation where the money received is from a bank for a home loan or in the form of credit card purchases. The taxable effect of the income is cancelled when you repay the loan or credit card. If you never repay the loan or credit card in their entirety, the IRS uses the amount you didn't repay as income and taxes it accordingly. The process normally goes something like this: a debt is forgiven and a discharge of indebtedness occurs. The lender is required to report the discharge of indebtedness income to the IRS on Form 1099-C and to the borrower. The lender should not and need not report forgiven past due interest and fees as discharge of indebtedness income, but some lenders do. In the event the lender does include amounts other than principle, you should attach a statement to the tax return explaining the difference between the 1099-C supplied by the lender and the correct calculation. The lender may also incorrectly report the entire debt as forgiven. In many cases, taxpayers may exclude the discharge of indebtedness income from their taxable income. These are for situations where you would be exempt from the tax. One, the insolvency exclusion. The insolvency exclusion applies when the homeowners liabilities exceeded assets at the time the debt is forgiven. Lower-income homeowners and those with high debt loads are likely to be...