Tax Tip #213

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.