Do I have to pay taxes on any discharged debt?

No, you generally do not have to pay taxes on any discharged debts in Maryland. When a debt is discharged in bankruptcy, the debtor is no longer legally obligated to pay that debt. In this case, debts can be discharged in one of two ways: either through a settlement agreement with the creditor or by a court order that relieves the debtor of all liability for the debt. In either case, the debt is considered forgiven and is no longer considered taxable income. Under federal law, any debts that are discharged in bankruptcy are generally exempt from taxation. However, under Maryland state law, there may be instances when a tax debt may still be considered taxable, such as when the state has a lien on the debt. In this case, the debt may still be considered taxable, but it is important to note that this is a rare occurrence. In general, any discharged debt is not considered taxable, either at a federal or state level, no matter how the debt was discharged. It is important to remember that any forgiven debt must be reported on your tax return, even if it is not considered taxable. This is because the Internal Revenue Service requires you to report all income, so that it can determine whether taxes are due. This includes any forgiven debt, so it is important to include it when filing your taxes.

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Do I have to pay taxes on any discharged debt?

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