How much would you expect to pay taxes on for $10k in forgiven/settled debt? (debts, rate)

[sunshinelove0000]

I recently learned that when negotiating a settlement on a loan/credit card that the borrower can be given a 1099-C and will owe taxes on the forgiven debt. I am trying to help my best friend settle her credit card debts and loans. She has one loan that is willing to forgive $10k. How much should she expect to pay in taxes on the $10k?

[Lemming95]

It depends on her total taxable income. If she has $30,000 in AGI before the loan forgiveness then she would have $40,000.
if her tax rate is 10% she will owe an additional $1,000. At a l5% rate it would be 1,500

[ncole1]

Originally Posted by Newenglander0000

I recently learned that when negotiating a settlement on a loan/credit card that the borrower can be given a 1099-C and will owe taxes on the forgiven debt. I am trying to help my best friend settle her credit card debts and loans. She has one loan that is willing to forgive $10k. How much should she expect to pay in taxes on the $10k?

The same as having $10k in additional income for the year.

[Bradmilano]

She should contact a cpa and ask them if they have any leisure time to explain the ability to use form 982