are debts discharged in bankruptcy taxable income?
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Bankruptcy: As above noted, debts discharged in bankruptcy are not considered taxable income. However, the timing of a bankruptcy filing is critical. To benefit from this exclusion you MUST file your bankruptcy BEFORE you receive a Form 1099-C. A bankruptcy can only discharge debt, not income.
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Debts not discharged in chapter 13 include certain long term obligations (such as a home mortgage), debts for alimony or child support, certain taxes, debts for most government funded or guaranteed educational loans or benefit overpayments, debts arising from death or personal injury caused by driving while intoxicated ...
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The short answer is no. A debtor can discharge the home equity loan in Chapter 7 bankruptcy but they cannot discharge it AND keep their home. However, if a debtor would like to keep their home, they may be able to file Chapter 13 bankruptcy and repay both their HELOC and their mortgage over a 3 to 5 year period.
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The majority of debts discharged in Chapter 13 bankruptcy are nonpriority unsecured debts. Credit card balances, personal loans, medical bills, and utility payments fit here.
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Student loans aren't taxable income, but other financial aid sources might be. ... Luckily, you don't report student loans, grants and scholarships as income on your tax return, unlike settled or forgiven student loan debt and some employer education benefits.
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Is a business loan considered taxable income? No, business loans are not generally considered business income as it is money that you have borrowed and are paying back as opposed to money that the company has earned. The one major exception is if some or all of your debt is forgiven by the lender or creditor.
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All Registered Retirement Savings Plans (RRSPs) and Registered Retirement Income Funds (RRIFs) are now exempt from seizure in bankruptcy, except for contributions made in the 12-month period leading up to the bankruptcy. ... In the past, certain RRSPs and RRIFs were not protected from creditors in the case of bankruptcy.
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Income tax payable is shown as a current liability because the debt will be resolved within the next year. However, any portion of income tax payable not scheduled for payment within the next 12 months is classified as a long-term liability.
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While it sounds like you may be judgment proof, this is not a typical debt since it is owed to the federal government and as you noted, can garnish your wages without taking you to court. But in bankruptcy the AAFES Card is just another unsecured creditor.
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Borrowed money is almost never income. If you take out a loan and pay it back, the Internal Revenue Service usually doesn't care about it. Loans that you don't pay back, though, could turn into income and you could have to pay taxes on the money you got but didn't repay.
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The majority of debts discharged in Chapter 13 bankruptcy are nonpriority unsecured debts. Credit card balances, personal loans, medical bills, and utility payments fit here. ... Because student loans are long-term debts, you won't have to repay them fully in your plan.
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According to the IRS, if a debt is canceled, forgiven or discharged, you must include the canceled amount in your gross income and pay taxes on that income unless you qualify for an exclusion or exception. Creditors who forgive $600 or more of debt for you are required to file Form 1099-C with the IRS.
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The following are some of the most common nonpriority general unsecured debts you can wipe out in Chapter 13 bankruptcy: ... most types of lawsuit judgments (be aware that a Chapter 13 discharge will not eliminate any debts arising out of willfully and maliciously injuring another person), and. outstanding utility bills.
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There are some limited circumstances in which you can discharge federal, state and local income taxes, as well as penalties and interest, in Chapter 7, Chapter 11, or Chapter 13 bankruptcy. Income taxes are the only kind of debt you can discharge under Chapter 7.
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Yes. However, be aware that the amount of your RMD, as well as any amount that exceeds the RMD, will be considered taxable income except for any part that was taxed before or that can be received tax-free (such as qualified distributions from designated Roth accounts).
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After a Chapter 7 Bankruptcy Discharge In most cases, you'll need to wait two years from the date of your Chapter 7 bankruptcy discharge before you'll qualify for this loan. Keep in mind that a discharge date isn't the same as the filing date.
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Generally, an amount included in your income is taxable unless it is specifically exempted by law. Income that is taxable must be reported on your return and is subject to tax. Income that is nontaxable may have to be shown on your tax return but is not taxable.