Reply to Tax questions: Medical-related Ch 7 bankruptcy, Legal settlement for personal injury

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[quote=Anonymous]2016 will bring both a final discharge in my Ch 7 bankruptcy case (massive medical bills) and a legal settlement for personal injury. I plan to do my own taxes for 2015 as I normally do, but wonder if I will have to have a professional assist with 2016. I can't seem to find out if the following are true:

1. the amount discharged in the bankruptcy is regarded as taxable income.
2. the settlement for personal injury is not taxable.

I'd like to get some solid advice now so that I can try to minimize any possible tax burden that would need to be paid off in the spring of 2017. Maybe I can adjust withholdings or do something else.

I should also mention that I am getting married in Fall 2016. My fiance and I [i]were[/i] professionally advised to wait to get married because we each are paying (separately) for a child's college tuition. The kids are graduating soon (mine this spring, his next December) so FAFSA won't matter anymore by the time we walk down the aisle. Fiance has no debt and excellent credit so I don't want to screw him over with a huge tax bill our first year as newlyweds.

If I do have to have a professional do my taxes, I am nervous using HR Block or another mall type tax firm. I always worry that they aren't particularly well-trained or motivated since most are seasonal employees. I'd like to find a reputable tax preparer with experience with bankruptcies and settlements.

I apologize if I come across as ignorant. I really am lost here. 2015 has been a horrible year in terms of health and finances. I don't want the stress to leak over into 2016 and 2017.

Thanks in advance.[/quote]

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