You can expect creditors to report debts — either cancelled or settled — to the Internal Revenue Service (IRS) if the amount exceeds $600. You are required to report this amount to the IRS in your tax return. However, the IRS will permit you to write off income from cancelled debts up to the amount by which you were insolvent during that tax period. It is recommended that you consult your tax advisor in order to analyze your specific tax circumstances. Learn how Rescue One Financial can help you resolve your debt.