+ Reply to Thread
Results 1 to 4 of 4
  1. #1
    John Stuart is offline Junior Member
    Join Date
    Mar 2007
    Posts
    2

    Tax liability for forgiven state student loan?

    What is the name of your state? Washington/Alaska

    I had a student loan debt from the state of Alaska. I was not able to complete my schooling and am now on disability, I receive VA disability compensation at the 100 percent rating, and Social Security disability. My condition is permanent.
    During the 2004 tax period, the State of Alaska, canceled my debt in full, due to my disabilities. As I did not file a tax return for 2004, now the IRS is contacting me demanding I file a 1040 for 2004. The IRS says it is because of the canceled/forgiven Alaska student loan?
    Where can I find information on if I have a tax liability for the canceled student loan? Do I have to fill out a 1040 to determine that? What about exceptions for my status, if any?

    Thanks in advance for any tips anyone can provide in reply!

    John
  2. #2
    seniorjudge is offline Senior Member
    Join Date
    Aug 2005
    Location
    St. Odo of Cluny Parish
    Posts
    29,533
    The IRS says it is because of the canceled/forgiven Alaska student loan?

    Correct; you got the dough, you get the tax liability.
    There are two rules for success:

    (1) Never tell everything you know.
  3. #3
    LdiJ is online now Senior Member
    Join Date
    May 2004
    Posts
    66,317
    Quote Originally Posted by John Stuart View Post
    What is the name of your state? Washington/Alaska

    I had a student loan debt from the state of Alaska. I was not able to complete my schooling and am now on disability, I receive VA disability compensation at the 100 percent rating, and Social Security disability. My condition is permanent.
    During the 2004 tax period, the State of Alaska, canceled my debt in full, due to my disabilities. As I did not file a tax return for 2004, now the IRS is contacting me demanding I file a 1040 for 2004. The IRS says it is because of the canceled/forgiven Alaska student loan?
    Where can I find information on if I have a tax liability for the canceled student loan? Do I have to fill out a 1040 to determine that? What about exceptions for my status, if any?

    Thanks in advance for any tips anyone can provide in reply!

    John
    Its possible that you may have to file the return, but may not owe any tax. Since you are permanently disabled and receiving only government disability payments you may meet the definition of insolvent, which would waive the tax on the cancelled debt.

    Go see a tax professional to help you with the 2004 return. Don't try to do this one yourself. You don't need a CPA, you just need someone who works all year long and is accustomed to helping people resolve problems with the IRS.
  4. #4
    John Stuart is offline Junior Member
    Join Date
    Mar 2007
    Posts
    2
    Quote Originally Posted by LdiJ View Post
    Go see a tax professional to help you with the 2004 return. Don't try to do this one yourself. You don't need a CPA, you just need someone who works all year long and is accustomed to helping people resolve problems with the IRS.
    OK, thanks for your advice, it is helpful. I'll get the 1040 professionally prepared.

Similar Threads

  1. Student Loan Liability
    By AnnaJames in forum Consumer Bankruptcy
    Replies: 6
    Last Post: 08-02-2011, 06:50 PM
  2. State Student Loan SOL??
    By wpagurl in forum Debt Collections
    Replies: 0
    Last Post: 10-26-2010, 04:11 PM
  3. Army Student Loan Repayment Tax Liability
    By carnelli53 in forum Auto Accidents and Vehicle Claims
    Replies: 2
    Last Post: 05-03-2009, 03:04 PM
  4. Forgiven Loan
    By Mike Green in forum Wills, Trusts and Estate Planning
    Replies: 20
    Last Post: 02-03-2008, 07:39 PM
  5. Tax on forgiven loan
    By doncopeland in forum Wills, Trusts and Estate Planning
    Replies: 2
    Last Post: 02-11-2002, 01:30 PM

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •  

© 1995-2012 Advice Company, All Rights Reserved

FreeAdvice® has been providing millions of consumers with outstanding advice, free, since 1995. While not a substitute for personal advice from a licensed professional, it is available AS IS, subject to our Disclaimer and Terms & Conditions Of Use.