tax credit for payin off credit cards?

[Sian]

so i was wonderin if anyone knew or heard of gettin a tax credit for payin off credit cards? i'm wonderin b/c i've paid off 2 credit cards & i'm abt 2 pay off another 1.

[Slug]

In a word, no.

[ea1776]

hahaha...

well maybe if you used tax-deductible money (student loan, HELOC, etc), to pay off a credit card. otherwise, no way! it's bad enough my tax dollars have to pay people's mortgages!

[littleroc02us]

ha, ha, ha, ha! Sorry. That's funny stuff. What do you mean? You get a reward for borrowing money and paying it back. Could you imagine if Congress passed a bill like that? I would laugh my butt off for a week straight. Could you imagine that if that happened I would have to pay for your tax deduction as a tax payer for you to use your credit card. I think I would leave this country asap.

[disneysteve]

Could you imagine that if that happened I would have to pay for your tax deduction as a tax payer for you to use your credit card. I think I would leave this country asap.

It isn't so far fetched. Credit card interest was tax deductible until 1986.

[Joan.of.the.Arch]

In fact, if you paid off any credit cards by by negotiating a settlement, you may owe income tax on the amount forgiven.

[cicy33]

In fact, if you paid off any credit cards by by negotiating a settlement, you may owe income tax on the amount forgiven.

I do find this insane. I have heard of it but the logic that was used to create this law was so flawed. if the people don't have the money to pay the bills and are negotiating a settlement how on earth are they going to pay taxes on the forgiven amount???? I mean DUH.

[cjscully]

I do find this insane. I have heard of it but the logic that was used to create this law was so flawed. if the people don't have the money to pay the bills and are negotiating a settlement how on earth are they going to pay taxes on the forgiven amount???? I mean DUH.

As usual, someone is quoting this bit of the tax code without giving the complete information.

When a creditor forgives a debt or a portion of a debt greater than $600, they are obligated to report it to the IRS and issue a 1099C to the debtor. Whether or not the debtor actually has a tax liability for that money depends on whether the person is insolvent. If the debtor was insolvent at the time the debt was forgiven the income from the forgiveness of indebtedness may be excluded from the debtors taxable income. See IRS Publication 908 - "Bankruptcy Tax Guide" and IRS Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness available on the IRS website

[Sian]

umm.. wow. thanks 4 the replies? i was lookin more in2 the interest of it being tax deductible. the card is active. i got it in order 2 pay off another credit card & they said if i did then they'd gimme a new 1 w/the balance of the old 1 on it. i've paid off 2 other credit cards that i had 70% interest rate on (added up the interest of 20% along with the annual/monthly fees & that's what they actually added up 2...)

i've got the money 2 pay off the active card & i was just tryin 2 figure out should i pay off the credit card or wait til i file for taxes b/c i know i'll owe the irs. i believe that i'll have the money 2 pay off the irs by then. (i didn't take out enuff withholdin in my paycheck )

but thank every1 4 the replies!!

[littleroc02us]

It isn't so far fetched. Credit card interest was tax deductible until 1986.

Still scary IMO as heck.... So, my tax dollars are used for someone to use their credit cards and pay them back?

[JoshuaHeckathorn]

so i was wonderin if anyone knew or heard of gettin a tax credit for payin off credit cards? i'm wonderin b/c i've paid off 2 credit cards & i'm abt 2 pay off another 1.

The credit card issuers would sure love it if this were true!