From our friend Holly R:
"According to the IRS, if you have canceled, forgiven, or discharged debt for less than the amount you pay, the amount of the canceled debt is taxable income."
Ooops.
Now, the taxes on this difference are, obviously, a lot less than the debt itself, so this isn't a slam on the idea. But if the recipients are unaware of the largess, or of this tax rule, they may be in for a nasty surprise at year's end.
"You get a car, and you get a car..."
Adds up.
Which is a sweet gesture, until one realizes the unintended consequence:NEW: Stetson Baptist Church in Florida pays off $7.2 million in medical debt for 6,500 struggling Central Floridianshttps://t.co/DmAPU6hbYk— Ryan Saavedra (@RealSaavedra) July 10, 2019
"According to the IRS, if you have canceled, forgiven, or discharged debt for less than the amount you pay, the amount of the canceled debt is taxable income."
Ooops.
Now, the taxes on this difference are, obviously, a lot less than the debt itself, so this isn't a slam on the idea. But if the recipients are unaware of the largess, or of this tax rule, they may be in for a nasty surprise at year's end.
"You get a car, and you get a car..."
Adds up.
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