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richa3
Returning Member

Amend tax return for student loan interest

I got my student loan discharged and was reimbursed for all the payments I made to my student loan. Since 2016, I have claimed student loan interest on my tax returns. Do I need to amend my previous tax returns since I was paid back?

4 Replies
Hal_Al
Level 15

Amend tax return for student loan interest

There are tax consequences for your situation, but filing amended returns is not the way to handle it.

 

You have two pieces of income: 1. the reimbursement of interest deductions claimed in previous years and 2. forgiven loan money. 

 

Enter the two items separately, in TurboTax (TT).  They both end up on line 8 of Schedule 1. 

 

You must declare the interest reimbursement,  as income for the year you received it.  

In TurboTax (TT), enter at:
- Federal Taxes tab (Personal in  Home & Business)

 - Wages & Income

Scroll down to:

-Less Common  Income

      -Misc Income, 1099-A, 1099-C

       - On the next screen, choose – Reimbursed Deductions from a prior year

         -On the next screen, choose Other Itemized Deductions (even though technically it was not an "itemized deduction")

 

You do not have to declare the loan forgiveness as income, unless you receive a form 1099-C for the amount forgiven. 

In TurboTax (TT), enter at:
- Federal Taxes tab (Personal in  Home & Business)

 - Wages & Income

Scroll down to:

-Less Common Income

      -Misc Income, 1099-A, 1099-C

       - On the next screen, choose – Cancellation of Debt (form 1099-C).  

 

richa3
Returning Member

Amend tax return for student loan interest

Will I get something in the mail saying how much interest I was reimbursed?

fanfare
Level 15

Amend tax return for student loan interest

did you even get your interest back ??

Hal_Al
Level 15

Amend tax return for student loan interest

Q. Will I get something in the mail saying how much interest I was reimbursed?

A.  You'll have to ask the loan Co that question?

 

I'm surprised you didn't get paperwork when you got the money.   You MAY get a 1099-C in January or February. If so, it will be broken down between interest an principal. 

 

You say you were  "reimbursed for all the payments".  That would indicate that you use the amount your deducted on past tax returns to declare income for the current year. 

 

Forgiveness of student loans is usually not taxable, even if you got a 1099-C.  Reference: https://www.investopedia.com/form-1099-c-understanding-your-1099-c-form-4782275

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