Tax Tip #213
Ralph Loggia • September 17, 2024
Debt Cancellation
The rule of thumb is that cancelled debt is considered taxable income. However, there are exceptions to every rule.
Some of these exceptions are:
- Taxpayers who are insolvent (liabilities are greater than the fair market value of their assets)
- Student loan indebtedness (through 2025)
- Up to $750K of forgiven home mortgage debt on a principal residence
- Bankruptcy
If any of these exceptions apply to you, contact our team to see how it can impact your taxable income.
