Respite from Education Loan Debt: Do You Know The Tax Implications?

Respite from Education Loan Debt: Do You Know The Tax Implications?

View All | June 2016 Newsletter Edition

Today’s college pupils usually leave college with an amount that is overwhelming of. In certain full situations, student education loans are released (also referred to as being terminated or forgiven). These loans are paid off by an employer in other cases. Both actions have actually taxation effects when it comes to learning education loan borrowers. We’ll give an explanation for income tax implications, but first, let’s cover some necessary background information.

Cancellation of Debt Tax Basics

The general rule is that a taxpayer’s gross income includes any cancellation of debt (COD) income — unless one of several tax-law exceptions applies for federal income tax purposes. The accessibility to exceptions (present in Section 108 for the Internal Revenue Code) will depend on different factors for instance the utilization of the loan profits and also the borrower’s monetary condition at enough time the “COD event” happens. Continue reading “Respite from Education Loan Debt: Do You Know The Tax Implications?”