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53. Canceled Debt Canceled debt is not counted as income. This page last updated in Release Number: 26-02 Release Date: 04/15/2026 Effective Date: 04/15/2026 16.3 Income Deductions 16.3.1 Child Support Payments Child support payments are not allowed as an income deduction. Spousal support, alimony, or maintenance payments may be able to be claimed as a BadgerCare Plus tax deduction (see SECTION 16.3.3 TAX DEDUCTIONS). 16.3.2 Pretax Deductions Pre-tax deductions are allowed if the payments are taken out of the individual’s paycheck on a pre-tax basis. Examples include but are not limited to: 1. Health Insurance premium payments, including pre-tax premium payments for medical, dental or vision plans 2. Health Savings Account (including flexible spending accounts) contributions 3. Retirement contributions 4. Parking & Transit costs 5. Child Care Savings Account contributions 6. Group Life Insurance premium payments 16.3.3 Tax Deductions Monthly expenses related to tax deductions from page one of the IRS Schedule 1 (Form 1040) are allowed as income deductions for the current year, even if the individual does not plan on filing taxes. If the expense is not incurred on a monthly basis, it will be prorated and counted as a monthly expense. Most of these deductions are not common, and they do not include itemized tax deductions, like charitable contributions or mortgage interest. A net loss carryover from previous periods, known as an NOL on IRS tax forms, is allowed as an income deduction. An NOL should be considered as an ongoing tax deduction but should be reviewed each tax year. If claimed, it would be found on of the IRS Schedule 1 (Form 1040). See SECTION 16.5 OTHER INCOME, #15 CAPITAL AND ORDINARY GAINS AND LOSSES for information on counting capital losses. In addition, a few deductions have caps, as noted in detail below. If an individual reports and verifies a monthly expense that is more than the monthly cap, the deduction will be the amount of the cap. 1. Student loan interest Interest on a loan taken to pay for school expenses for the following people at the time the loan was taken out: