Disabled Can Now Avoid Taxes When Student Loans Forgiven

The Good News in the 2018 Tax Law: After January 1, 2018 borrowers whose student loans are forgiven due to “total and permanent disability” no longer have to pay federal income taxes on those forgiven loans.  Anyone who is permanently disabled, including military veterans,  will no longer be hit with a tax bill when their student loans are forgiven (referred to as forgiveness of debt). The Bad News out of the 2018 Tax Law: The bad news is that the change, part of a massive overhaul of the tax code spelled out by the Tax Cuts and Jobs Act, is not retroactive and the borrowers will still have to pay the taxes (as ordinary income). The U.S. Government Accountability Office, the Department of Education forgives about $2 billion in loans owed by disabled borrowers every year. Who can be considered Disabled? Veterans who can’t work because of service-related injuries aren’t the only disabled borrowers who can qualify for federal student loan…

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