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| *Loan,banking and credit>>>income tax |
My $28,000 hospital bill was forgiven. Is that considered income for 2007 tax season? |
The hospital foundation considered my aid application and decided to forgive the entire amount. On my tax return for next year, will I have to count that as income? Under other circumstances, you would potentially include a forgiveness of debt as income. However, since had you paid the debt, it would have resulted in a deduction to you (medical expenses on Schedule A), the cancellation of debt is not considered income to you, to the amount that paying the liability would have resulted in a deduction. Schedule A medical expenses must be more than 7.5% of your Adjusted gross income, so keep that in mind. In the event they issue you a 1099, check with the foundation to see if they can issue a corrected 1099 that shows $0. They should be aware of this rule already though, as I'm certain you're not the first one that they have forgiven a debt for. If they are unable to for their own reasons, check with an adviser about how to offset the income with deductions, as it shouldn't be included in your income. Hope this helps! Source(s): Code Sec. 108(e)(2) No- it was all ready earned and taxed when you earned it. Hopefully, you file your taxes every year. If it is money you haven't earned yet to pay the bill- just carry on as you do. You just can't say that you have 28K in medical bills unless you actually owe that amount. Potentially, yes. Debt that are forgiven outside of a bankrupcy or insolvency should be including in income. You will receive a 1099 from the foundation if you are to include it. IRC Sec 61(a) and Sec 108(a) Tax CPA No. Only if you receive a 1099 |
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