Which type of debt cancellation is usually reported on the taxpayer’s income?

The correct choice is that canceled credit card debt is usually reported on the taxpayer’s income. When a taxpayer has unpaid credit card debt that is later canceled or forgiven, the Internal Revenue Service (IRS) considers this canceled amount as income, which is subject to taxation. This is based on the principle that when a debt is canceled, the taxpayer gains an economic benefit, and therefore, it is treated as income.

In the case of canceled mortgage debt, while there are some exceptions (like cancellation of mortgage debt on a principal residence under certain circumstances), it might not always be reported as income if it qualifies for specific exclusions. Canceled student loans can also have unique treatment, especially if the cancellation is based on certain qualifying conditions, such as working in public service. Debt that is canceled upon the death of the debtor typically does not result in taxable income for the estate or the beneficiaries, as it is considered settled as part of the estate process.

Thus, canceled credit card debt stands distinctively in how it directly affects the taxpayer's income reportable for tax purposes.