Expert Q&A

The best way to answer this question is by first using a recent example:
A client of mine has a Discover card and their account is delinquent. The balance is currently
$10,988 and I was able to negotiate a settlement in full of $5,000. The client accepted the deal. While this is a good settlement, the client had to factor in the additional income she will have to report next year. Discover will issue a 1099 and report to the IRS the difference between the balance and settlement amount. If the client expects it’s adjusted gross income to be in a marginal tax bracket of 25%, then the cline can expect to pay $1,497 in additional taxes. In practical terms the client paid $6,497 to eliminate $10,988 in debt. Are there ways to minimize this tax liability? Contact me today and we can discuss this further.