TPD Loan forgiveness with VA disability rating.

[Anonymous]

You are lucky. The discharge due to to disability being in the military is permanent from the date it’s granted. No three year waiting period. They will delete your old school loans and put them in Nelnets name in good standing. You’ll get a good account benefit for ten years. Thank you for your service.

[Anonymous]

Hello all,

I'm not sure that it's accurate that the IRS doesn't tax the discharge amount as income--unless, it applies to discharges after the new tax bill took place.  I say this because, I received a TPD Loan discharge due to my VA disability rating in the summer of 2017--I think it was in June.  I just received a 1099-C in the amount of taxes that I owe for the student loan amount. 

[Anonymous]

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wrote:

Hello all,

I'm not sure that it's accurate that the IRS doesn't tax the discharge amount as income--unless, it applies to discharges after the new tax bill took place.  I say this because, I received a TPD Loan discharge due to my VA disability rating in the summer of 2017--I think it was in June.  I just received a 1099-C in the amount of taxes that I owe for the student loan amount. 

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In order for it not to be taxed you have to prove you are insolvent. It won’t happen if you have 401ks or lots of savings or own a home. If you have resources it will be taxed. In many cases people are poor who are disabled. For those individuals there is a tax waiver for the 1099-c form. You will always get the 1099. It’s up to you to prove insolvency if you don’t have resources. If you do have resources, then you are liable for the taxes.

[JVille]

You need to go see a CPA and get expert Tax advice. In this case I would not depend on Turbo Tax or the advice of a Forum such as this one.

[Anonymous]

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wrote:
You need to go see a CPA and get expert Tax advice. In this case I would not depend on Turbo Tax or the advice of a Forum such as this one.

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It’s sound advise. People should a

ways seek an expert. But some of us have been thru the process and know what we are talking about. So yes some people in here know what they are talking about thru experience. I am one such person. 

[JVille]

You may well know what your experience is with this issue but it’s a really tricky Tax situation. And everyone’s experience and situation is different.
A CPA is the one to size up this taxable event.

[Anonymous]

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wrote:
You may well know what your experience is with this issue but it’s a really tricky Tax situation. And everyone’s experience and situation is different.
A CPA is the one to size up this taxable event.

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I know as much as a CPA about this. And what I said is spot on. It’s. It tricky. It comes down to your assets and if you are insolvent or not. A tax professional can definitely fill out the forms for you. Or an online tax preparer can do it for you. But the facts are the facts and not disputable. You have to prove insolvency to waive the tax burden. Otherwise whatever was forgiven counts as income and is taxed. And with the exception of military, one has a three year period where they check your income each year to see if it remains under certain standards. Then it’s final in three years. Immediately for armed force disability. It’s only tricky in what forms and how to fill out. 

[Anonymous]

IF you get a TPD after the new tax law takes effect you won't have to pay taxes on the forgiven amount. I waited until they included it in the new tax bill before I filed.

[Anonymous]

Hi - I thought I'd provide an update to taxes on discharged student loans through the VA 100% Permanent and Total (P&T) (forgive me if this info has already been brought fourth).  According multiple sources, the law changed in January 2018 (as part of the new tax laws) where student loans discharged by VA veterans who become permanently disabled will no longer be hit with a tax bill when that debt is forgiven.  This new law, like other parts of the law, expires in 2025.  Unfortunately, from what I've read, the law is not retroactive.  So the loans would need to have been discharged in 2018.  Other cirucmstances to not paying taxes still apply from what I understand.

[Anonymous]

Alex, I’m looking into the TPD forgiveness program and was wondering if you had a 100% (combined) disability rating or a Total Permanent Disability rating? Also, what documents did you submit to prove your rating to Nelnet? Thanks again for the help.