If collection agency and/or original creditor agreed to settle debt for lesser amount as paid in full and report it as "paid in full" instead of "settled", or "partial payment", is it still treated as income and will I still face tax implication?
Yes. It has nothing to do with how it is listed...the idea is, if you pay less than what is in fact owed, the balance is considered income (a gain).
You are going to have to wait and see if they file a 1099. What they put on your credit report does not determine the tax issue.
If the debt was settled this year, they are required to file and send the 1099c by January 30th of next year.
However, it should not be hard to figure out now what effect it will have on your taxes. You take the amount of forgiven debt, and add it to your estimated total income for all of 2019, then figure out an estimated tax return.
However, maybe you won't owe any tax on the forgiven debt!
If you were insolvent, you probably do not have to count the forgiven debt as income! Here is the info link to the IRS: https://www.irs.gov/pub/irs-pdf/p4681.pdf
If the amount of debt that was forgiven is $600 or more the creditor is supposed to report that debt forgiveness to the IRS regardless of how it is termed.
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