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Please clarify what you meant by "do I tax myself on the additional $25,000".
Whether the tax you pay can be deducted depending on which type of tax. Payroll taxes you can deduct. However, if you deducted it before, you cannot deduct it again. The interest you pay is deductible. The penalty is not deductible on tax return.
Fiona Chen, MPA, PH.D., CPA, ABV, CFF, CITP