Do I have to pay taxes on debt settled through negotiations?

Yes, you do have to pay taxes on debt settled through negotiations in Washington. This is because the IRS treats debt settlement as income, meaning you have to pay taxes on the amount forgiven. The IRS considers the portion of the debt that is forgiven as income. So, if you negotiated to settle a debt for less than what you owed, that forgiven portion would be considered income and you would be required to pay taxes on it. In addition to paying taxes on the forgiven debt, you should also be aware that debt settlement may have an impact on your credit score. When a debt is settled, the creditor may report the debt as “settled in full” or “paid for less than the full balance” on your credit report. This could negatively impact your credit score and should be considered when making the decision to negotiate a debt settlement. Before entering into a debt settlement agreement it is important to understand all the terms and ensure that you are comfortable with them. If you are struggling to pay your debt and considering debt settlement as an option, it is important to speak with a licensed debt settlement representative in Washington to understand the advantages and disadvantages of settling your debts.

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Do I have to pay taxes on debt settled through negotiations?

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