The Corner

Yes, You Owe Taxes on the Money You Didn’t Pay Back

USA Today:

Canceled credit card debts come back to haunt taxpayers

Billions of dollars in credit card debt that was charged off during the Great Recession— some of it decades old — is coming back to haunt borrowers in the form of unexpected tax bills.

Debt that is canceled or forgiven is considered taxable income, something many borrowers don’t realize until they receive a 1099-C tax form from their lender. The IRS projects that creditors will send taxpayers 6.4 million 1099-Cs in 2012, up from 3.9 million in 2010.

The increase likely reflects the rise in credit card defaults during the economic downturn, says Gerri Detweiler, personal finance expert for Credit.com. Moody’s Investor Service estimates that the nation’s six largest credit card companies wrote off more than $75 billion in uncollectible balances in 2009 and 2010.

Taxpayers who receive a 1099-C, which is also submitted to the IRS, are liable for the tax bill unless they can prove that the debt was discharged in bankruptcy or that they were insolvent when the debt was canceled, says Jennifer MacMillan, an enrolled agent in Santa Barbara, Calif.

Shelley Cartier, 48, of Austin, recently received a 1099-C for a credit card debt that was more than 20 years old. Cartier says she filed for bankruptcy in the early 1990s but no longer has the paperwork to prove the debt was discharged. Numerous calls to the financial institution have gotten her nowhere, she says.

“I can’t file my taxes until I get it cleared up,” Cartier says.

The rest here.

Most Popular

Politics & Policy

Students’ Anti-Gun Views

Are children innocents or are they leaders? Are teenagers fully autonomous decision-makers, or are they lumps of mental clay, still being molded by unfolding brain development? The Left seems to have a particularly hard time deciding these days. Take, for example, the high-school students from Parkland, ... Read More
PC Culture

Kill Chic

We live in a society in which gratuitous violence is the trademark of video games, movies, and popular music. Kill this, shoot that in repugnant detail becomes a race to the visual and spoken bottom. We have gone from Sam Peckinpah’s realistic portrayal of violent death to a gory ritual of metal ripping ... Read More
Elections

Romney Is a Misfit for America

Mitt’s back. The former governor of Massachusetts and occasional native son of Michigan has a new persona: Mr. Utah. He’s going to bring Utah conservatism to the whole Republican party and to the country at large. Wholesome, efficient, industrious, faithful. “Utah has a lot to teach the politicians in ... Read More
Law & the Courts

What the Second Amendment Means Today

The horrifying school massacre in Parkland, Fla., has prompted another national debate about guns. Unfortunately, it seems that these conversations are never terribly constructive — they are too often dominated by screeching extremists on both sides of the aisle and armchair pundits who offer sweeping opinions ... Read More
U.S.

Fire the FBI Chief

American government is supposed to look and sound like George Washington. What it actually looks and sounds like is Henry Hill from Goodfellas: bad suit, hand out, intoning the eternal mantra: “F*** you, pay me.” American government mostly works by interposition, standing between us, the free people at ... Read More
Film & TV

Black Panther’s Circle of Hype

The Marvel Cinematic Universe (MCU) first infantilizes its audience, then banalizes it, and, finally, controls it through marketing. This commercial strategy, geared toward adolescents of all ages, resembles the Democratic party’s political manipulation of black Americans, targeting that audience through its ... Read More