What are the tax implications of student loan forgiveness?
An example of an AI chatbot conversation about student loan forgiveness and its tax implications.
What are the tax implications of student loan forgiveness?
The tax implications depend on the type of forgiveness. For example, under the American Rescue Plan, federal student loan forgiveness is not taxable for loans forgiven between 2021 and 2025.
Does this mean I won't owe any taxes if my loans are forgiven during that period?
Correct! If your federal student loans are forgiven during that time, you won't owe federal taxes on the forgiven amount.
What about state taxes? Are they different?
Yes, state tax laws vary. Some states may tax forgiven student loans, while others follow the federal guidelines. It's best to check your state's regulations.
Can you give me examples of states that tax forgiven loans?
Sure! States like Mississippi and North Carolina have historically taxed forgiven student loans, so it's important to consult a tax professional in your state.
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