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If debt is canceled or written off by the lender, is that amount included in gross income?

The answer to that question is generally “YES”. If you have cancellation of debt income because your debt is canceled, forgiven, or discharged for less than the amount you must pay, the amount of the canceled debt is taxable and you must report the canceled debt on your tax return for the year the cancellation occurs.

Learn more about the specific on the IRS website.


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