Knowledge Base

15835: 1040 - Student Loan Discharge or Forgiveness

1040 Individual

Are student loans that have been discharged included in gross income?


According to the Tax Cuts and Jobs Act, (page 28) for tax years beginning after December 31st 2017, and before January 1st 2026, gross income does not include any amount that is student loan debt that was discharged due to death or permanent disability. 

Per Notice 2022-01, "When all or a portion of a student loan is discharged after December 31, 2020 and before January 1, 2026, an applicable entity is not required to, and should not, file a Form 1099-C information return with the IRS or furnish a payee statement to the borrower under section 6050P as a result of the discharge." For more information, see the Instructions for Lenders and Loan Servicers Regarding Certain Discharged Student Loans.

State Returns - Taxability at the state level varies by state. You will need to review the state guidelines to see whether or not student loan forgiveness is taxable on the state return. 

To learn more see IRS Topic 431 - Canceled Debt – Is It Taxable or Not?

Other types of discharged indebtedness are typically reported on Form 1099-C. For more information on this form and how to enter it into the software, please see the Related Links below. 

Related Links

Also In This Category

On a scale of 1-5, please rate the helpfulness of this article

Not Helpful
Very Helpful
Optionally provide private feedback to help us improve this article...

Thank you for your feedback!

Article has been viewed 11K times.
Last Modified: 7 Months Ago
Article not rated yet.