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My wife's loans were canceled because she is permanently disabled (has not worked in 9 years). When I enter the information for the canceled loan into TurboTax it is stating that the loan cancelation is taxable. However, several other sources say that loans canceled due to disability are not taxable income. How do I enter that information into TurboTax without it registering as taxable. One similar question/answer said the program would ask me for "more information", and there is a link that says "Student Loan cancelations may be exempt", but no real information or way to mark this as non-taxable.
Do I just ignore it (we didn't receive a 1099-c from the lender) and leave it out of TurboTax.
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The American Rescue Plan provides relief to students with government and federal student loans by allowing students with forgiven loan debt to exclude the discharged debt from their taxable income for tax years 2021 through 2025.
If your student loan forgiveness qualifies, then you do not report the form 1099-C on your tax return.
Please read this TurboTax blog for more information.
Thanks, that is consistent with what I've read elsewhere.
It would be nice if the TurboTax program actually provided some guidance on this apart from the broad statement that such income "may" be tax exempt. I know there is a lot of information to cover, but for people who have this situation this can be a significant difference in the taxes to be paid (as in, many thousands of dollars).
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