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kendoro
New Member

Why is a 1099-Misc from the State of California for a State Loan Repayment Program check showing as taxable income?

According the the Affordable Care Act (ACA), money received from a State Loan Repayment Program is not considered taxable income.  How do I enter the information on my 1099-Misc so that it will conform with the law below?


SEC. 10908. EXCLUSION FOR ASSISTANCE PROVIDED TO PARTICIPANTS

IN STATE STUDENT LOAN REPAYMENT PROGRAMS FOR

CERTAIN HEALTH PROFESSIONALS.

(a) IN GENERAL.—Paragraph (4) of section 108(f) of the Internal

Revenue Code of 1986 is amended to read as follows:

‘‘(4) PAYMENTS UNDER NATIONAL HEALTH SERVICE CORPS

LOAN REPAYMENT PROGRAM AND CERTAIN STATE LOAN REPAY- MENT PROGRAMS.—In the case of an individual, gross income

shall not include any amount received under section 338B(g)

of the Public Health Service Act, under a State program

described in section 338I of such Act, or under any other

State loan repayment or loan forgiveness program that is

intended to provide for the increased availability of health

care services in underserved or health professional shortage

areas (as determined by such State).’’.

(b) EFFECTIVE DATE.—The amendment made by this section

shall apply to amounts received by an individual in taxable years

beginning after December 31, 2008. 

1 Best answer

Accepted Solutions
ToddL
New Member

Why is a 1099-Misc from the State of California for a State Loan Repayment Program check showing as taxable income?

If this payment is subject to the  SEC. 10908. Exclusion, here are the steps necessary to report the 1099-MISC and the amount to be excluded from your income.

(Since the IRS got a copy of the 1099-MISC, you have report it on your return).

To report the income:

  • Enter the 1099-Misc in the "Other Common Income" section (enter "1099misc" in the Search Box and Select "Jump to 1099misc")
  • Enter "SEC. 10908. Student Loan Repayment"as the description. Indicate that it does not involve work like your main job, that it did not involve an intent to make money, and is not a payment your received in the past or expect in the future.
  • The income will be reported on line 21 of your return.

To report the exclusion:

  • Go to Less Common Income, Miscellaneous Income and Other reportable income (enter "other reportable income" in the Search Box and Select "Jump to other reportable income")
  • Continue to the screen Other Taxable Income. Enter the description as "SEC. 10908 Exclusion" and the amount as a negative number.

A corresponding negative amount will be entered, and line 21 will be zero. See the attach screenshot example (different descriptions, but still offsetting).

View solution in original post

1 Reply
ToddL
New Member

Why is a 1099-Misc from the State of California for a State Loan Repayment Program check showing as taxable income?

If this payment is subject to the  SEC. 10908. Exclusion, here are the steps necessary to report the 1099-MISC and the amount to be excluded from your income.

(Since the IRS got a copy of the 1099-MISC, you have report it on your return).

To report the income:

  • Enter the 1099-Misc in the "Other Common Income" section (enter "1099misc" in the Search Box and Select "Jump to 1099misc")
  • Enter "SEC. 10908. Student Loan Repayment"as the description. Indicate that it does not involve work like your main job, that it did not involve an intent to make money, and is not a payment your received in the past or expect in the future.
  • The income will be reported on line 21 of your return.

To report the exclusion:

  • Go to Less Common Income, Miscellaneous Income and Other reportable income (enter "other reportable income" in the Search Box and Select "Jump to other reportable income")
  • Continue to the screen Other Taxable Income. Enter the description as "SEC. 10908 Exclusion" and the amount as a negative number.

A corresponding negative amount will be entered, and line 21 will be zero. See the attach screenshot example (different descriptions, but still offsetting).

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