Received a refund check from the US treasury because of the Sweet vs Cardona Settlement. Would the refund be considered taxable income by the state of New Jersey?

[Anonymous_]

https://www.ppsl.org/sweet-v-cardona-class-members

[bucklasek180]

My questions is about NJ state tax, not federal.

This is what it says about state tax:

"State income tax policies with respect to student loan discharges may vary. If you have questions about state income taxes, we recommend that you seek out resources from your state of residence and contact a tax advisor."

[bucklasek180]

Talked with Turbo Tax Live and received the answer that the refund check from the Sweet vs Cardona Settlement is taxable income.

Information is below:

Legal settlements that are taxable (including previously deducted medical expenses related to physical injury or illness) are entered as miscellaneous (other) income.

Interest earned on settlements is taxable income and should be entered as a  Form 1099-INT.

If you received a 1099-MISC:

1. Sign in to TurboTax and open or continue your return.
2. Search for 1099-misc and select the Jump to link.
3. If you're asked Did you get a 1099-MISC?, answer Yes.
   • If you've already entered a 1099-MISC, select Add Another 1099-MISC.
4. Enter the information from your 1099-MISC and select Continue.
5. On the Describe the reason for this 1099-MISC screen,
   enter lawsuit settlement and select Continue.
6. On the Does one of these uncommon situations apply? screen, select This was money from a lawsuit settlement and then answer the back wages question before selecting Continue.

If you didn’t receive a 1099-MISC:

1. Sign in to TurboTax and open or continue your return.
2. Search for lawsuit settlement and select the Jump to link.
3. Answer Yes to the question Any Other Taxable Income?
   • If you've already entered miscellaneous income, select Add Another Miscellaneous Income Item.
4. Enter a brief description and the amount you received and select Continue.

[joeyam67]

I spoke with the Borrowers Defense contact at Dept of Education and they verified it is NOT Taxable.  Your state may differ.  When you say you spoke with someone at TurboTax did they say yes it is or here read this link?  Im guessing they gave you the link tat you screenshotted with settlement tax info which is vague and isn't true for all settlements.  the first line you posted say "Legal settlements that are taxable"  does not mean Sweet vs Cardona is taxable it means if a settlement is taxable do the steps below.  Everything i have found online and the various people i have spoke with at DoE and my loan servicer have stated it is not taxable.