Student Loan Repayment Assistance

[Cathy]

I have client who received a 1099-c from PHEAA $16,000

We live in a rural area, an her loan was forgiven. She's a doctor.

I'm reading Pub 970, but it's confusing. Appreciate any help.

[Brian EA]

I have client who received a 1099-c from PHEAA $16,000

We live in a rural area, an her loan was forgiven. She's a doctor.

I'm reading Pub 970, but it's confusing. Appreciate any help.

Her loan maybe forgiven by her debtor. NOT BY UNCLE SAM.

1099C I think goes on line 21 - other income

[Unregistered]

1099c

May be forgiven by Uncle Sam, did you read Pub.970 page 31?

[Bill Tubbs]

learned something new...

May be forgiven by Uncle Sam, did you read Pub.970 page 31?

Sounds like "Student Loan Repayment Assistance"...

From page 31: "Beginning in 2004, student loan repayment assistance you receive under the following programs is tax free."

So, if client was under either of the programs listed on Page 32, the loan forgiveness is tax-free!!

If you client was not in either of those programs, then looks like the forgiveness would be taxable -- but paying tax on the amount forgiven is still better than having to pay the principal!

Bill

[Cathy]

Follow up

I reviewed Pub 970 Page 31.

Two criteria was in order to be tax-free.

National Health Service Corps loan Repayment Program - Client said, no

State programs eligible for funds under the Public Health Service Act. (Federal Program)

I called PHEAA, my case was paid with "state funds" not federal.

Conclusion, this one is taxable.

Thanks, for your help. The board works, and that GOD for the board.