So, I finally got to the 300 payments to have my loans forgiven. I feel like a moron for switching into SAVE in July 0f 2024 before applying to move to IBR in November. It took four months to process the switch and as a result the Dept of Ed says I hit my milestone in Match of 2026, missing the tax free forgiveness. The weird thing is my email from the Dept of Ed said the following:
One reason you may opt out of IDR discharge is to avoid a potential state tax liability. If you opt out of IDR loan discharge, you'll be required to continue paying your loan(s).
It said nothing about a potential federal tax liability. To confuse me even more the email from Nelnet this morning said the following:
WHAT YOU NEED TO KNOW
Here are some important points on this IDR forgiveness:
Due to the American Rescue Plan Act of 2021 the balance of your loans that were forgiven is not considered taxable income for federal income tax purposes. Since state and local tax implications will vary, we recommend you contact a tax advisor for more information.
The words "is not" were even underlined. I wonder if this could be considered legally binding? Either way I need to call the Ombudsman group because I think my count should have hit 300 in December and I'd like the payment refund but worst case did I just hit the lottery tax wise? My forgiven amount is just over 63k so the federal tax burden would be quite a savings if I manage to avoid it.
Any advice would be appreciated!
Posted by jdfree77