Taxes and Student Loan Forgiveness

If your student loans are forgiven, does that count as taxable income?
Generally, yes. Cancellation of debt is taxable income.
However, there are exceptions.
Section 108(f)(1) of the tax code says that loan forgiveness isn’t taxable when the loan was forgiven because the taxpayer worked for a certain period of time in a certain profession.
Thus, if you have $100,000 of student loans forgiven because you worked as a teacher or for a nonprofit for a certain period of time, your loan forgiveness won’t be taxable.
But if an exception doesn’t apply, and you have $100,000 of student loans forgiven, you’ll have to pay tax on an extra $100,000 of income.
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[@MatthewBrandon1]

Good to hear that PSLF isn’t taxable but what a shame that people can be penalized on student debt forgiveness. Education should be free in the US like the rest of the western world.

[@westirons8874]

Very useful 👍

[@Edspira]

Thank you!

[@Dave_ed]

Thank u I learned alot from ur videos

[@Edspira]

Glad to hear that!

[@hopelives9307]

What about Student loan discharge due to disability??

[@marionwoods4490]

Who can I call

[@bryanyoussi4402]

So instead of being in debt they will be taxed on income they don’t have possibly incurring fines and penalties with the IRS for not meeting their tax obligations?

[@Edspira]

Yes, it's crazy

[@reclaimingtherepublic8916]

Forgiven? No such thing. It’s just shifted to someone else and it’s called theft