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Debt Relief and Taxes: What Happens to Debt Forgiven by Lender? by Guest Blogger Marian “MJ” Jacklich, CPA

By:  Marian “MJ” Jacklich, CPA (Guest Blogger)

You found yourself sliding down a money ramp you never thought was possible.  Whether from a job loss, business problems, health problems, trying to help family members, or a mix of these, you now find yourself stretching every dollar you have that does come in and you still find yourself short.  Worse (you think), you keep coming up short.

First, take a deep breath.  Then keep breathing regular breaths.  The good news is, without getting too excited, you may well be able to “come out on the other side” still breathing, definitely feeling better.

Each person’s situation will vary some, but in general there are some real steps you can take to minimize the damage to your credit, reduce or head off taxes, and focus on your ability to recover.

In 99.9% of the cases, it will take some serious work on your part.  Since you are the person that will benefit from the hard work, though, why not? Better yet, find out what to do from a professional so you can focus and make that work count.

You might have heard from a friend, co-worker, or colleague how much they were helped by filing bankruptcy.  The thought has entered your mind more than once.  It sounds good.  Hopefully, you have not begun acting on these well meaning friends and/or family advice, though.  Bankruptcy is not for everyone.  It can make a situation worse, not better, and only a professional can help assist in making that determination.

If you are reading this blog, you have taken the right step in looking for real, professional advice.

“I thought Congress passed a bill so we don’t have to pay tax on debt relief.”

They did. It expired last year, Dec. 31, 2013.  It only applies to certain types of debt.  It’s not there right now in 2014, and with new elected politicians coming into Washington, it may not be there.  Further, you cannot bankrupt out of IRS taxes, so it’s not wise to try to figure it out on your own.

Widerman Malek Celebration Law Office and MJ CPA have scheduled a  half-hour workshop on this topic for Thursday, September 4th, 2014 at 6:00 p.m.  You can register (for free) by calling Widerman Malek Celebration Law Office at (407) 566-0001 or emailing your RSVP to Space is limited, so RSVP as soon as possible.