Tuesday Tax Time: the “Student Loan Forgiveness” Edition

Probably a lot of you with student loans know about which I am about to speak…

The IRS has stated privately that it will waive your student loan debt if you work in a public service job or teach school in low income areas.  Here are the details, according to The Kiplinger Tax Letter:

1  You gotta work in the low income area for 120 months,

2  You gotta keep paying your loans on a timely basis during the 120 months,

3  This only applies to loans originally made by the government,

4  You will probably still get a 1099 (for the loan forgiveness amount) from the entity that gave you the loan, even it the debt was waived by the IRS.  The originating loan company has to send you a 1099 if they give debt waivers over $600, thus,

5  You will have to substantiate the loan forgiveness to the IRS after you receive the 1099 for the waiver amount (so keep good records!).

Thanks, Jason M. Blumer, CPA

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