Do I have to pay taxes on any discharged debt?

In Hawaii, the answer to the question of whether taxes must be paid on discharged debt is generally no. This is because most debts discharged through bankruptcy are considered to be non-taxable. This includes credit card debt, personal loans, and other consumer debts. However, there are some exceptions to this rule. For example, taxes may have to be paid on certain kinds of discharged debt if the debt was associated with certain kinds of income. This includes such things as forgiven business debts or mortgage debt that was used to purchase income-producing property. In addition, the Internal Revenue Service (IRS) may consider discharged debt as taxable income if the bankruptcy was filed with the intention of avoiding paying taxes on that particular debt. In most cases, debt discharged in bankruptcy will not be treated as taxable income. However, it is important to consult with a qualified bankruptcy attorney or tax professional to understand the full implications of filing bankruptcy and whether any taxes may need to be paid on any discharged debts.

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