Student Loan Discharge Based on Borrower Defense Evidence

[The Rileys]

Last year I received a refund when my student loans were discharged. I got the check late last year and put it right into the bank. Would there be anything I'd need to do when filing taxes (live in MA)?

[maglib · Accepted solution]

@The Rileys 

A provision in the 2021 American Rescue Plan Act, student loan forgiveness will not be taxable even if you receive a refund for federal tax purposes.

However, some states may require tax to be paid on the canceled loan debt.  Currently, Arkansas, Hawaii, Idaho, Kentucky, Massachusetts, Minnesota, Mississippi, New York, Pennsylvania, South Carolina, Virginia, West Virginia, and Wisconsin have the potential to tax forgiven student loans.  

Massachusetts excludes from gross income such income that is attributable to the forgiveness of certain student loans pursuant to G.L. 62, § 2(a)(2)(R).

For more information, see the link below:

Student Loan Forgiveness