AboutMike Wellman Expertise I was a former Manager with Price Waterhouse, now PricewaterhouseCoopers, the largest accounting firm in the world. I have had clients in almost every industry and of every size.
I will only answer questions dealing with IRS problems such as delinquent tax returns, Offers in Compromise (Tax Settlement), IRS collection matters including installment agreements, liens, levies, seizures, audits, appeals, innocent spouse claims and injured spouse claims. All other will be referred to the question pool.
Experience Over 25 years experience in taxation specializing in IRS collections, examinations and appeals.
Publications New York Times, Wall Street Journal, Your Money.
Education/Credentials BBA, Baylor University.
Awards and Honors IRSOS.com won the Knowledgeweb award for educational excellence for content.
Expert: Mike Wellman Date: 2/14/2008 Subject: debt settlements
Question My ex-boyfriend and I got a loan together. Well to make a long story
short when he promise that he would help me, and he didn't. The loan was
for around 25,000. I ended up settling for around 9,000. I received a
tax form for an amount of $14,000. Now I own nothing. I lived with my
parent for 28 years. My question I was wondering is if I will get away
without paying the penalty on the taxes. If so, do I have to be the
only one since my ex's name is on the loan with me. I was just
wondering if he could finally be held accountable for it. Thanks
Answer Debt cancellation is generally taxable. However, if you were insolvent at the time, you can exclude it from your income. Insolvent means that your liabilities were greater than your assets at the time you defaulted.
If you were not insolvent, you can avoid interest and penalties by paying the tax in full when you file your return.
