After paying off a debt $4417.65 from a dept collector the irs can tax me for it?

If you actually paid it off, there are no additional tax consequences that I can think of. However, if the debt was cancelled (written off) or in other words, forgiven, you may be issued a form 1099-C and taxed as if you had actually earned the money. There isn't enough information to accurately answer your question.

The IRS doesn't tax you for paying-off debts. You can be taxed, however, if the creditor agreed to forgive the debt. This is called discharge of indebtedness income and the IRS uses some constructive or imaginary transactions to make this happen.

First, the IRS will pretend that you received the amount of money forgiven by your creditor, on which amount the IRS would impose income taxes just as if you had received this amount of money in cash. Then the IRS will pretend that you paid the debt from the imaginary income you didn't actually received.

I know this may not seem fair, especially if the debt was forgive as a result of a hardship of some kind, but this IRS views a creditors cancellation of debt just as enriching as receiving that same amount of income. For a dramatic example, imagine if your mortgage lender forgave the balance of your mortgage loan, say $200,000. Now, without a debt free home and no mortgage payment, you are in the same position as if someone had given you $200,000 to payoff the mortgage. Its just two different sides of the same coin.

Hope this helps,

Randall Perrier