What are the tax consequences of home foreclosure, vehicle repossesion and credit card write offs? What is Cancellation of Debt Income?

Watch this video to understand the tax consequences of home foreclosure, vehicle repossession and credit card debt write offs. Creditors send Form 1099 –C / Cancellation of Debt to the IRS after a home foreclosure, vehicle repossession and credit card debt write off. The IRS will automatically presume that the amount listed on the 1099-C is income to the taxpayer which should be listed on the federal tax return. Under some circumstances this income is NOT taxable. If you have questions about your own situation you should talk to a lawyer. You can apply for help from Legal Aid of West Virginia to see if we can assist you.