How much can you settle with CA without having to claim to IRS?

[deesown]

Is it if you save more then 500?

[jp2861]

I believe it's $600. But, I also remember someone saying something about if the settlement is obtained while you're in BK the tax doesn't apply. I think the IRS rule only applies if you settle out of court. I'm sure someone will clarify this.

[HHM]

If the amount of forgiven debt is $600 or less, then you do not have to declare that amount as income.

[deesown]

If the amount of forgiven debt is $600 or less, then you do not have to declare that amount as income.

well I owe 3,600 on a bill and they told me they would be willing to settle it for 3,000.

[magyar123]

well I owe 3,600 on a bill and they told me they would be willing to settle it for 3,000.

Try to settle it for $575.00 less, and give them the extra $25. At $600 even they'll generate a 1099 for $600 - which will possibly put you in a higher tax bracket. Your tax liability will be a hell of a lot more than $25.