Do I have to pay taxes on any discharged debt?

The answer to this question depends on the type of debt you have discharged in a bankruptcy proceeding in California. Generally, discharged debts are typically exempt from taxation. That means you won’t have to pay taxes on the debt, but you may have to report the amount of the debt that was discharged on your federal income tax return. The Internal Revenue Service recognizes two types of debt: secured and unsecured. Secured debt includes mortgages, car loans, and store credit cards. This type of debt typically can’t be discharged in bankruptcy and you must still pay any taxes owed on it. Unsecured debt includes personal loans, credit cards, and medical bills. This type of debt can be discharged in bankruptcy, and you typically don’t have to pay taxes on it. It’s important to keep accurate records and receipts of all debts that are discharged in bankruptcy. A certificate of discharge should also be provided to you by the court that approved your bankruptcy application. This document can help you if the IRS raises a question about any discharged debt. If you have any doubts or questions about whether you must pay taxes on any discharged debt, it’s important to consult with a qualified attorney or accountant. They can provide you with additional legal advice and help you determine if you need to pay taxes on any discharged debt in California.

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Do I have to pay taxes on any discharged debt?

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