I owe to Bank of america the amunt $ 2,415.89 I settle the account for 700 abut 20 cents for a dollar, but they told me I will receive a 1099 form as an income. My question is how much I have to pay to IRS?

I owe to Bank of america the amunt $ 2,415.89 I settle the account for 700 abut 20 cents for a dollar, but they told me I will receive a 1099 form as an income. My question is how much I have to pay to IRS?

You will receive a 1099 on the money they forgave ( without being exact) it is about 1700 that they are forgiving, so that is the income. This is where the?? so much will depend on your other income, if you normally get a refund, you may just not get one or have a smaller one. And your tax rate, do you have state taxes also ? A good estimate will be 30 percent so a rough estimate on taxes will be 510 dollars in taxes due on the forgiven money that will have to due on this.

Now what happens, the 1099 is merely added to your total income at the end of the year, so if you start having extra money put toward your taxes now in your pay check, you can help off set it.