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Debt Relief – Insolvency – Bankruptcy Information » Debt Consolidation and Refinancing » Does debt consolidation have to be reported in gross income?

Does debt consolidation have to be reported in gross income?

If someone is paying an 18% tax rate on a credit card debt and then take out a loan to pay off the debt (and pay 10% interest)…does this debt consolidation need to be reported in gross income when filing your taxes?

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6 Responses to "Does debt consolidation have to be reported in gross income?"

  1. wg0z says:
    there is no income here.
  2. Max Hoopla says:
    All you are doing is changing creditors.
  3. tro says:
    only if you eventually get a 1099 c would it ever be considered income to you
  4. RUSerious says:
    No. This is not income, taxable or otherwise.
  5. StephenWeinstein says:
    No. Debt that you continue to owe (even if a different loan) is not part of your income. However, if they forgive or cancel any of the debt, you do have to report that in gross income.
  6. Spruceree says:
    No, debt consolidation at a reduced interest rate doesn’t need to be reported as income. It’s the same as if you refinanced your mortgage at a better rate. You wouldn’t owe any taxes just because you got a lower rate.

    You only have a tax liability on any FORGIVEN portion of the debt you owe. You would receive a 1099 form from the creditor if you were in this position.

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