How to treat loan forgiveness

[elw18]

I have a question regarding the reporting and taxing of loan forgiveness.  I will receive a 1099 this year that represents "loan" forgiveness from a hospital for a "loan" that includes 1 year salary guarantee/student loan repayment/signing bonus/relocation.  It is forgiven at a rate of 1/24 each month I continue at the position.  This 1099 will cover three months of forgiveness (Oct-Dec 2025). If I were to leave my position I would be responsible for repaying the balance of the "loan" amount. The salary guarantee covered the period of Oct 2024-Sept 2025. For the portion of the "loan" was paid to me in salary I will receive a W2 (from the private group I was employed by and paid by during the guarantee period). Regular income taxes will have already been withheld/paid on the amount covering the salary. My understanding is that since I have already paid taxes on the salary portion reported on the W2 I should not responsible for the salary portion that is reported for forgiveness on the 1099 as it will result in double taxation on the salary portion. Is there a was to make the reduction in the amount reported for forgiveness on the 1099 within Turbotax that would allow me to utilize the product to complete my return for 2025. I have been using Turbotax for about 7 years and would love to continue, but this situation is unique. Thank you for your help in advance.

[PatriciaV]

It's possible to exclude debt forgiveness that falls under certain IRS rules. This is a manual process that requires using TurboTax Desktop. Because this is a complex topic with a significant monetary risk, you may consider upgrading to TurboTax Experts. This online service provides step-by-step guidance from a tax expert whenever you need assistance, either over the phone or by screensharing.

Additional Information:

• How do I report excludable (non-taxable) canceled debt?
• When to Use Tax Form 1099-C for Cancellation of Debt
• IRS Tax Topic 431 - Canceled Debt - Is It Taxable or Not?
• IRS Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments

[elw18]

Thank you for this response.  So I am clear... with the product you recommend and with expert guidance this is a situation that I can work through using Turbotax?

[PatriciaV]

Yes. With the assistance of a TurboTax Expert, you should be able to determine how much (if any) of the debt cancellation needs to be reported on your tax return. Because your situation is complicated, you'll benefit from the one-on-one guidance of our Experts.