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Revision as of 16:18, 5 March 2025
Note: This writer is not a CPA or tax technician. This article is for general information purposes, and should not be construed as tax good advice. Readers are strongly encouraged to consult their tax professional regarding their personal tax situation.
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Now, let's see if daily whittle that down some whole lot. How about using some relevant tax credits? Since two of your children are in college, let's feel one costs you $15 thousand in tuition. Luckily tax credit called the Lifetime Learning Tax Credit -- worth up to two thousand dollars in this example. Also, your other child may qualify for something called the Hope Tax Credit of $1,500. Speak to your tax professional for the most current advice on these two tax attributes. But assuming you qualify, that will reduce your bottom line tax liability by $3500. Since you owed three thousand dollars, your tax is already zero coins.
I've had clients ask me try to to negotiate the taxability of debt forgiveness. Unfortunately, no lender (including the SBA) to enhance to do such one thing. Just like your employer it will take to send a W-2 to you every year, a lender is were required to send 1099 forms for all borrowers possess debt understood. That said, just because lenders are anticipated to send 1099s does not that you personally automatically will get hit by using a huge government tax bill. Why? In most cases, the borrower can be a corporate entity, and an individual might be just a personal guarantor. I realize that some lenders only send 1099s to the borrower. Effect of the 1099 on your personal situation will vary depending on what kind of entity the borrower is (C-Corp, S-Corp, LLC, etc). Most CPAs will be capable of to let you know that a 1099 would manifest itself.
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