IBR, 10 Year Forgiveness, Federal Loans, and Taxes.

Discuss various money matters here. Loans (federal and private), scholarships, lottery winnings, or other school finance related information and queries.
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TIKITEMBO
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IBR, 10 Year Forgiveness, Federal Loans, and Taxes.

Postby TIKITEMBO » Sun Sep 18, 2011 3:02 pm

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Last edited by TIKITEMBO on Thu Sep 20, 2012 1:32 am, edited 1 time in total.

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Bildungsroman
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Re: IBR, 10 Year Forgiveness, Federal Loans, and Taxes.

Postby Bildungsroman » Sun Sep 18, 2011 3:07 pm

If you have your loans discharged after 25 years on IBR you have to pay taxes on the loans that are forgiven. I don't believe the same tax penalty applies to loans forgiven under public service forgiveness.

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NYC Law
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Re: IBR, 10 Year Forgiveness, Federal Loans, and Taxes.

Postby NYC Law » Sun Sep 18, 2011 3:08 pm

Your friend is wrong - no taxes on public service (10 year) forgiveness. You do pay taxes (which can and will be quite hefty) if you go the 25 year private sector route.

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TIKITEMBO
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Re: IBR, 10 Year Forgiveness, Federal Loans, and Taxes.

Postby TIKITEMBO » Sun Sep 18, 2011 3:14 pm

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Last edited by TIKITEMBO on Thu Sep 20, 2012 1:32 am, edited 1 time in total.

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NYC Law
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Re: IBR, 10 Year Forgiveness, Federal Loans, and Taxes.

Postby NYC Law » Sun Sep 18, 2011 3:22 pm

To be exact:
http://www.ibrinfo.org/what.vp.html#pslf
What are eligible jobs? In most cases, eligibility is based on whether you work for an eligible employer. Your job is eligible if you:
are employed by any nonprofit, tax-exempt 501(c)(3) organization;
are employed by the federal government, a state government, local government, or tribal government (this includes the military and public schools and colleges); or
serve in a full-time AmeriCorps or Peace Corps position.
If you don't meet these criteria, the Department of Education's regulations create a two-part test of other circumstances under which you may still be eligible:
(1) your employer is not "a business organized for profit, a labor union, a partisan political organization, or an organization engaged in religious activities, unless the qualifying activities are unrelated to religious instruction, worship services, or any form of proselytizing;"
and,
(2) your employer provides any of the following public services: emergency management; military service; public safety; law enforcement; public interest law services; early childhood education; public service for individuals with disabilities and the elderly; public health; public education; public library services; and school library or other school-based services.


I think they make it pretty clear private schools don't count.

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buddyblack
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Re: IBR, 10 Year Forgiveness, Federal Loans, and Taxes.

Postby buddyblack » Sun Sep 18, 2011 3:23 pm

Your friend is wrong. In part because the public service debt forgiveness hasn't been around long enough to happen for anyone yet. They require 120 payments (10 years) made after October 2007, so October 2017 is the earliest that loan forgiveness can happen.

Moreover, I read the language the same way you do. That being said, regulations could change. But my sincere hope is that this one won't.

http://www.ibrinfo.org/

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TIKITEMBO
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Re: IBR, 10 Year Forgiveness, Federal Loans, and Taxes.

Postby TIKITEMBO » Sun Sep 18, 2011 3:37 pm

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Last edited by TIKITEMBO on Thu Sep 20, 2012 1:33 am, edited 1 time in total.

spondee
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Re: IBR, 10 Year Forgiveness, Federal Loans, and Taxes.

Postby spondee » Sun Sep 18, 2011 3:52 pm

NYC Law wrote:I think they make it pretty clear private schools don't count.


Almost all private schools are 501(c)3 nonprofits.




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