No, you do not have to account for your federally funded student loan on your tax return.
The IRS does not require reporting on certain loans that were discharged. Discharged student loan debt will no longer be treated as income, meaning that these students will no longer have to pay any taxes on this discharged debt. The change, however, will expire at the end of 2025, unless renewed by an act of Congress. Both public and private student loans are subject to the new rule.
Thank you for the information. Very helpful. I was very concerned since the bank that was servicing the loan sent 1099C to the IRS.
How did you make out for your taxes last year? Since you didn't report this as income under ARPA- but were sent a 1099C (as was the IRS)- did you ever receive an IRS notice or any issues receiving your refund? Thanks for your guidance! A whole bunch of us are dealing with this with very minimal guidance from Discover.
It depends. Rules changed with the American Rescue Plan (ARP) of 2021.
Student loan forgiveness. The American Rescue Plan Act of 2021 modified the treatment of student loan forgiveness for discharges in 2021 through 2025.
Generally, if you are responsible for making loan payments, and the loan is canceled or repaid by someone else, you must include the amount that was canceled or paid on your behalf in your gross income for tax purposes. However, in certain circumstances, you may be able to exclude this amount from gross income if the loan was one of the following.
If you decide you must include the income use the instructions in the link below: