This is wrong. Discover issued letters stating that it would be reported to the IRS and credit bureaus as paid in full. The issue is that student loan servicers were instructed not to provide 1099s as it would confuse borrowers about whether to report it or not. It does not matter if it was canceled or forgiven. If it was a student loan discharged between 2021 and 2025, it does not count as taxable income according to ARPA. There is no difference between “forgiveness”, “cancellation” or “discharge”. It is purely semantics. Nowhere in ARPA does it specify that the loan must be listed solely as “forgiven” for it not to count as income. I even spoke with someone in the same situation who filed and said it ended up not counting as income. I honestly have decided just to file with CPA assistance because it is very clear that Turbo Tax has not adjusted their filing system to reflect current legislation. This is not shocking to me seeing as TT is known for lobbying against free IRS filing services to squeeze more money out of its customers. At this point, if you can afford CPA assistance, just go that route to be on the safe side.
Edit: The only way it would be considered taxable income is if your state decides not to reciprocate ARPA’s federal legislation and taxes it as income. I believe only 6 states have chosen to count it as taxable income. So look into if your state is one of the 6 that tax student loan discharge.
