Loan Forgiveness- Taxable Wages?

[DocRx]

What is the name of your state? Ohio

I received tuition assistance from my employer and in return I agreed to work 6 years at one of their facilities. Each pay a portion of the total loan amount is forgiven and I am taxed on that amount in my gross pay but that amount forgiven is then taken out of my net pay, so I am paying taxes on the amount forgiven but I am not being paid that amount. My question is if any or all of the amount forgiven should be included in my taxable wages at the end of the year. This will increase my tax liability a great deal.

Thanks
S.E.

[tranquility]

Having it included in wages is the best outcome. I've seen some contracts written so it is not as wages, but since it is compensation for work, a 1099-misc was issued. This means the taxpayer had to pay the employer portions of social security and medicare as well as his own.

Sorry, it is income to you. This is the most advantageous way to handle it.

[LdiJ]

Originally Posted by tranquility

Having it included in wages is the best outcome. I've seen some contracts written so it is not as wages, but since it is compensation for work, a 1099-misc was issued. This means the taxpayer had to pay the employer portions of social security and medicare as well as his own.

Sorry, it is income to you. This is the most advantageous way to handle it.

I agree 100%. Simply make sure that your withholding is set correctly to take that into consideration. You may need to change your withholding allowances.