11/27/2022 0 Comments Missouri revised statutes![]() Last Friday, we provided a list of states with the potential to tax student loan debt forgiveness. Selectively conform to the IRC or adopt independent definition of income (taxable).Conform to a pre-ARPA version of the IRC (taxable).Not fully conform to the current IRC but separately exclude student debt cancellation (exempt).Not fully conform to the current IRC but bring in the relevant ARPA provision (exempt).Conform to the current version of the IRC but decouple from ARPA (taxable).Conform to the current version of the IRC with ARPA (exempt).There are at least six relevant interactions with the Internal Revenue Code (IRC) for purposes of the treatment of student loan debt cancellation. But, for a variety of reasons, not every state does that. States which follow the federal treatment here will likewise exclude debt forgiveness from their own state income tax bases. Under § 9675 of the American Rescue Plan Act (ARPA), however, the forgiveness of student loan debt between 20 does not count toward federal taxable income. Here’s one more question to add to the mix: will states consider student loan forgiveness a taxable event? In some states, the answer could be yes.Īs a general rule, a discharge of indebtedness counts as income and is taxable, as my colleague Will McBride explains. How much will it cost? Who will benefit the most? How will it contribute to inflation? Does the president even have the legal authority to implement this loan forgiveness? President Biden’s announcement of student loan debt forgiveness is already raising many questions. ![]()
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