The government has cancelled your student loan. The lawyers helped negotiate a low debt balance. You received a generous settlement at the end of the lawsuit. I paid low premiums through the health insurance market.
That’s good news, isn’t it? perhaps. Probably not. stay tuned. A pleasant surprise may come with an unpleasant surprise at the time of tax.
Bartering
Bartering is a custom of a time when we find new life in a turbulent economic situation. Whether it’s a product or a service, bartering can save money and connect you to the community, whether it’s a craigslist, swap meetings, word of mouth, or organized bartering.
Not surprisingly, the IRS wants to be part of that community as well. If you trade goods or services instead of paying cash, the value of what you receive is considered taxable income.
The IRS does not consider informal bartering to be taxable for non-commercial purposes, such as babysitter cooperatives.
However, if you stop car repairs for CPA services, for example, the fair market value of these services is taxable. For example, when exchanging products, the same thing happens when exchanging products.
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Bartering regularly will help you remove some of your headaches from your taxes when you take part in a formal barter. These organizations that may charge membership or transaction fees will submit 1099-B, “Revenues from Barter Transactions with Brokers” and document the value of the barter transaction.
I found the money
If you stumble over money like discovering cash on an old sofa you bought on Craigslist, the IRS thinks it is taxable.
The property found is also considered taxable income. For example, if you find a gold bracelet, you borrow taxes on the fair market value of the bracelet when it is discovered (a reasonable estimated price for the item in its current condition).
However, if you ultimately sell that gold bracelet, what profit will be taxed, not the total value of the bracelet.
On March 22, 2025, members of Desert Gold Gold Diggers Metal will search for fans of the club in search of buried treasures south of Tucson, Arizona. Alan Stein/Epoch Times
Illegal activities
Income from illegal activities such as theft and drug sales must be reported to the IRS. Really?
This rule raises obvious questions, but it actually existed and was used to defeat the gangster Al Capone. In the 1930s, after prosecutors were unable to defeat Capone on murder and pirated charges, they found him guilty of not filing income taxes in millions of dollars in malicious profits.
Gambling prizes, prizes, prizes
Whether it’s a lottery win or a lucky night at the casino, gambling prizes are taxed regardless of the amount. However, by itemizing the deduction, you can claim gambling losses as tax deductions.
Similarly, if you win a car, vacation, or prize money in a contest, you will be considered taxable income.
Allowed debt
In general, tolerant debt is treated as income subject to tax. The IRS states, “Generally, if the obligation is cancelled, allowed or discharged, the amount of the cancelled liability is taxed if the amount of the liability is small. If it is taxable, you must report the cancelled liability on your tax return for the year in which the cancellation occurred.”
For amounts allowed over $600, lenders must file IRS Form 1099-C to declare “loan tolerance.” Includes the type of liability that was cancelled, the amount of liability, and the date the liability was allowed. “The taxpayers then hold this money and are considered income,” the IRS says. Therefore, 1099-C must be reported on your tax return.
However, there are exceptions, in particular amounts that are cancelled as gifts, bequests, devisations or inheritances.
However, it only applies to loans emitted between January 1, 2021, and January 1, 2025 and December 31, 2025. Student loan obligations will once again be subject to federal taxes unless Congress enacts new measures. How it is taxed depends on the program where the loan is allowed.
And while the federal government won’t tax you on your allowed student loans this year, your state may be. As of 2025, five states have allowed student loan obligations: Arkansas, Indiana, North Carolina, Mississippi and Wisconsin.
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Village
If you receive money from a litigation settlement, a check from your insurance company after a car accident, or a retirement check from your employer, you may notice that there is a corresponding tax bill.
There are many distinctions in this category, and subjects guarantee a separate article.
However, there are exceptions. The situation in your case will make a difference whether revenue is considered income and taxation – or exemption by the IRS.
It is recommended that you consult a tax lawyer, accountant, or personal injury lawyer before accepting the settlement. There are careful and creative ways to build settlements and payments to maximize the amount that is exempt from taxation.
Unemployment benefits
Unemployment benefits are intended to support, but are taxed by the federal government.
Health insurance
Speaking of unemployment, if you were reducing your health insurance premiums in the health insurance market because you were off work or you couldn’t get affordable insurance in other ways, you could be a nasty surprise at tax times.
If you underestimate your annual income when applying for market insurance – perhaps because you got a job or your income increased later in the year.
These reduced premiums likely came in the form of “premium tax credits.” And the government looks at how much you earn throughout the year to determine market insurance eligibility, so even if you have little income for a year, you will get a new job or hike that means you are borrowing the difference between the amount of tax credits you received and the amount you qualify for.
While you were off work, you may have paid a significantly reduced premium for your health insurance through a major insurance company. But someone paid the rest of their monthly premiums. And if your income rises, that person, the government will reclaim the money.
The good news is that there is a cap on how much you have to pay back, based on your income level. That cap threshold is 400% of federal poverty levels. However, there may be very large tax bills if your income exceeds that threshold.
I’ll summarize
Tax hours can be a time of self-reflection as you look back at where your money went and where it is heading.
We may be calm and shaken our heads as we recognize that the government is part of the events that made up for our tax year.
But on a practical level, that reflection will help you plan this year to make taxes more painful next year.
Epoch Times Copyright©2025. The views and opinions expressed are those of the author. They are for general informational purposes only and should not be interpreted or interpreted as recommendations or solicitations. Epoch Times does not provide investments, taxes, legal, financial planning, real estate planning, or other personal financial advice. Epoch Times is not responsible for the accuracy or timeliness of the information provided.
