First and foremost, Happy Lent. What a historic one it has been so far with Pope Benedict stepping down. I am sure that our Catholic friends are experiencing a mixed bag of emotions. Of course right away the conspiracy theories pop right up but personally I believe that he feels he can no longer lead his flock. After all, he is blind in one eye, he just had his pacemaker batteries replaced (I wonder if they use Duracell? Just kidding!) and I can see that he is deteriorating before our eyes. I do not believe it is a decision that he took lightly. The next few weeks should be interesting.
Finally our items from Bethlehem will be shipped next week. It takes time to create perfection, which is what they are doing with our new carved Mother of Pearl earrings and the Bust of Jesus in the tree trunk. As soon as they are here I will certainly let you know.
I know I did a post not too long ago about forgiveness, but it has been a hotly debated topic on a business site that I belong to. There are so many hot topics that sometimes I feel as if my head is going to explode. What never ceases to amaze me is how brilliant some in that group are about theology and the Bible. It is sometimes humbling and a bit intimidating to say the least to banter back and forth over issues but it keeps me on my toes.
Of course, I am just starting on my taxes as well (UGH). After two years using a local CPA we have separated, so I am doing them myself as I have done for the majority of my tax-filing years. Line by line I am filling in the items and today I noticed the one called Other Income and that is where you would include any forgiveness of debt. As I had a very long career in banking prior to this glorious business that line made me laugh as there truly is no such thing as a forgiveness of debt. That is a very misleading term. I used to see it all the time on customer tax returns. Here is what happens with a so-called forgiveness of debt - Say you owe a credit card company $5,000.00 and things are tight in your budget so you let that payment slide for a few months. Next thing you know it has been handed over to a collection agency. Often times that collection agency will make payment arrangements with you to pay it down but they will also sometimes offer you a settlement agreement of half of that amount due. Wow, great, you think to yourself, I get to slide for that other $2,500. Nope. First, before transferring your account to a collection agency, the credit card company will do what is called a charge off which will show up on your credit report. A charge off is taken off their books as an active account. You do not want that on your credit report. When you send that $2,500 to the collection agency your account will be closed with them. At the end of the year you will receive a 1099 from your original creditor, the credit card company, which includes the $2,500 that was forgiven of your debt to them. That debt will continue to show up on your credit report for 7 years as a charge off, but it will now show that it has been settled. Here comes the fun part that most are not aware of - That $2,500 is considered income. It must be reported on your taxes as such. The creditor will report the amount to the IRS, so you have to include it or they will hunt you down and take your first born child. Actually they will send you a letter, but it sounds so much more dramatic the other way. You will be taxed on any forgiveness of debt in amounts over $600.00 by the Federal, State and Local governments (unless you have the good fortune to live in New Hampshire or Deleware). If they truly forgave you your debt, your credit report would be shiningly beautiful and you would not have to be paying taxes on it. We forgive you! God bless! Thanks for paying us what you could and have a really, really nice day!
There is my little tip of the day. I do not know why I felt compelled to write about it today; perhaps it was the stupid dream I had about being at work in the bank. (Gosh I loved the outfit I was wearing.) But it is a good thing to know if you do not already. It might make you think differently about charging and repaying items on your credit card. That is it for now, stepping down from the soapbox.
God bless and have a really, really nice day!
Peace,
Mare
Finally our items from Bethlehem will be shipped next week. It takes time to create perfection, which is what they are doing with our new carved Mother of Pearl earrings and the Bust of Jesus in the tree trunk. As soon as they are here I will certainly let you know.
I know I did a post not too long ago about forgiveness, but it has been a hotly debated topic on a business site that I belong to. There are so many hot topics that sometimes I feel as if my head is going to explode. What never ceases to amaze me is how brilliant some in that group are about theology and the Bible. It is sometimes humbling and a bit intimidating to say the least to banter back and forth over issues but it keeps me on my toes.
Of course, I am just starting on my taxes as well (UGH). After two years using a local CPA we have separated, so I am doing them myself as I have done for the majority of my tax-filing years. Line by line I am filling in the items and today I noticed the one called Other Income and that is where you would include any forgiveness of debt. As I had a very long career in banking prior to this glorious business that line made me laugh as there truly is no such thing as a forgiveness of debt. That is a very misleading term. I used to see it all the time on customer tax returns. Here is what happens with a so-called forgiveness of debt - Say you owe a credit card company $5,000.00 and things are tight in your budget so you let that payment slide for a few months. Next thing you know it has been handed over to a collection agency. Often times that collection agency will make payment arrangements with you to pay it down but they will also sometimes offer you a settlement agreement of half of that amount due. Wow, great, you think to yourself, I get to slide for that other $2,500. Nope. First, before transferring your account to a collection agency, the credit card company will do what is called a charge off which will show up on your credit report. A charge off is taken off their books as an active account. You do not want that on your credit report. When you send that $2,500 to the collection agency your account will be closed with them. At the end of the year you will receive a 1099 from your original creditor, the credit card company, which includes the $2,500 that was forgiven of your debt to them. That debt will continue to show up on your credit report for 7 years as a charge off, but it will now show that it has been settled. Here comes the fun part that most are not aware of - That $2,500 is considered income. It must be reported on your taxes as such. The creditor will report the amount to the IRS, so you have to include it or they will hunt you down and take your first born child. Actually they will send you a letter, but it sounds so much more dramatic the other way. You will be taxed on any forgiveness of debt in amounts over $600.00 by the Federal, State and Local governments (unless you have the good fortune to live in New Hampshire or Deleware). If they truly forgave you your debt, your credit report would be shiningly beautiful and you would not have to be paying taxes on it. We forgive you! God bless! Thanks for paying us what you could and have a really, really nice day!
There is my little tip of the day. I do not know why I felt compelled to write about it today; perhaps it was the stupid dream I had about being at work in the bank. (Gosh I loved the outfit I was wearing.) But it is a good thing to know if you do not already. It might make you think differently about charging and repaying items on your credit card. That is it for now, stepping down from the soapbox.
God bless and have a really, really nice day!
Peace,
Mare
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