Indian_Pale_Male t1_je85b34 wrote on March 30, 2023 at 2:34 AM

Reply to comment by patrickbabyboyy in My husband and I owe 22k in taxes but we only made a combine total of 75k by one-eye-owl

$75K taxable still wouldn't be close. I think the only way they could've gotten to that number would be if, as other people have mentioned, they had to pay back healthcare premiums. Even then $25K might be a bit of a stretch. Most likely, these numbers OP provided are missing a ton of context to really know

merc08 t1_je8gq9n wrote on March 30, 2023 at 4:16 AM

There could have been a large medical debt forgiven, which counts as income.

nelsonnyan2001 t1_je8qw22 wrote on March 30, 2023 at 6:10 AM

Something to add to my ever growing collection of funny tax edge cases

bldrmpls t1_je8negj wrote on March 30, 2023 at 5:28 AM

I don't know all the tax laws by far (which have their own logic--or lack thereof), but I understand accounting. Wouldn't one have to have deducted medical expenses at some point in order for them to be taxable when forgiven?

merc08 t1_je8phb9 wrote on March 30, 2023 at 5:53 AM

No, you can't deduct an expense you didn't actually pay. The hospital (or their 3rd party billing) records the amount you owe and if you don't pay then after a while they are allowed to write it off as a lost expense. In doing so, they send documentation to the IRS (and to you) saying that they essentially paid you the amount you owed. It's possible OP got that letter and only thought it was forgiving the debt, without understanding the income aspect.