Looks like the CARE Act included a provision where an employer can pay $5,250 towards student loan debt tax free to the employee and a deduction for the employer. It looks like this works similar to Section 127 where an employer can pay for education for an employee. What are your thoughts on qualification in this scenario? Client is a two person partnership. Neither partner takes salary via W2 or guaranteed payment because business has shown a loss for the last two years and will lose again for 2020. Client wants to take advantage of this and pay off $5250 of his student loan debt from his partnership and use as a deduction. Although I disagreed with him and don't see how this is possible I have not actually read anything that supports my initial response. Thanks in advance for the guidance.
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Well I just found something that says it can't benefit an individual who owns more than 5% of the company stock. Although the partnership doesn't technically issue stock he is a 50% owner of the partnership. I'm assuming that's a disqualification for him... -
You said he can pay his employee, not a partner/himself. But, I'm not reading it to see if partners qualify, so I'll leave that research to you while I'm in the midst of a PPP Forgiveness webinarComment
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