Taxes on a Forgiven Hospital Debt?
In December 2005, I incurred a $16,000 hospital bill. In 2006, the $16,000 hospital bill was forgiven, after appealing to it's charitable arm. Is this amount now characterized as income, and do I owe taxes on this amount for 2006? Both myself and the hospital are located in Illinois.
Asked on 8/05/08, 5:02 am
1 Answer from Attorneys
Re: Taxes on a Forgiven Hospital Debt?
When a debt is forgiven, it is usually considered income (unless a bankruptcy is involved).
The IRS is notified to the event when the creditor issues a 1099-C to the debtor. Chances are, if the hospital did not send you a 1099-C at the end of 2006, they did not report it to the IRS.
Good luck to you.
Answered on 8/09/08, 7:28 pm
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