TurboTax FAQ
TurboTax FAQ
504 people found this useful

Will a bankruptcy affect my taxes?

Bankruptcy shouldn't affect your tax return, even though cancellation of debt is normally considered taxable income. That's because debts discharged in bankruptcy are specifically excluded from income under the tax rules.

Personal bankruptcy expenses, such as legal fees, are not deductible. However, expenses for a business bankruptcy can be deducted as a business expense.