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A Tid bit of good news

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ArNG11

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I wanted to sort of update this as it has been mentioned in other post about the tax implications of student loan forgiveness.  The taxes that play in that forgiveness can be substantial.  It will be counted as income.  My loan forgiveness was 44k.  Thats a pretty big chunk of taxable income.  I thought I was in serious trouble with taxes.  I was actually going to owe 9k to federal and 1k to state.

There is a remedy to this and it is insolvency.  You can file the form yourself through a program like Turbo tax and such, usually most say Home and business Taxes.  I could not find and online version or access to this process without buying the program in CD format.  Form 982 and insolvency worksheets.  It is a bit troublesome however, it will save you tons. In my case it did.  

Basically it looks at your financial picture before the student loan pay off, and sees if you were upside down.  Owe debt more than your assets combined.

It is definitely worth the investment and definitely needed information to be considered before going through the student loan forgiveness process.  

I was trying to find a post on here that discussed it as well but couldn't find it offhand, however, I do recall folks talking to me and others about where to seek advice.  In any case a tax attorney, an accountant, and other folks experience helped immensely.

Im not sure about other tax programs but I imagine that they would have access to the same forms, perhaps in deluxe or professional versions of their software.  Also it is worth a person's while to talk to a tax attorney and/or accountant as they are the experts in these types of situations.  

Hope that this is of some help to folks on here.

 

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  • HadIt.com Elder

Awsome Mr A...

Glad you posted this.

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I felt I needed to  Buck, talking about running around like a chicken with their head cut off.  Taxes can be a real " challenge". There are dozens of rules and tax regulations that apply to forgiveness of debt due to disability. Sadly each state also has their own mechanism when dealing with forgiven debt due to disability and so does the Federal Government. 

I advocate to read up on these particular laws as tax burdens can be lessened quite a bit.  

Knowledge is power.  Hope it can be of good use to Veterans and their families.:smile:

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