States TARGET Biden’s Student Loan Cancellation – Taxes Incoming!
(StraightNews.org) – In August, the Biden administration announced it was moving forward with a plan to cancel between $10,000 and $20,000 of student debt for low and middle-class borrowers. While many people shared their excitement for such a move, some are realizing they may now have a heftier tax burden next year if they accept the federal loan forgiveness.
When a loan is forgiven, the government typically counts it as taxable income. But, the American Rescue Plan outlined that any federal student debt forgiven from the end of 2020 until the end of 2025 would not be included as gross income on a federal tax return. However, many states did not pass similar laws, meaning students who use Biden’s $10,000 loan forgiveness plan may end up owing a big tax bill come April next year.
Just like always, "free" is never free. Some debt may be forgiven but it will reappear on your taxes and the taxes of all Americans which is WRONG! Joe Biden's latest attempt to buy votes will just cost all of us. #Bidenflationhttps://t.co/KEiYwcdie6 pic.twitter.com/RdCQkXz3QD
— New York GOP (@NewYorkGOP) September 9, 2022
Mississippi is one of seven states, including Wisconsin and Indiana, that will tax student loan forgiveness as income as of the month of September. One borrower from Mississippi told Fox News if he accepted the $20,000 in the forgiveness he’s entitled to as a Pell-Grant recipient, he would owe an additional $1,000 in taxes next year, which is a big chunk of money for someone fresh out of school.
While borrowers living in states without an income tax, like Florida and Washington, don’t have to worry about such laws, there are still plenty of former students wondering if they can still make this student loan forgiveness work.
What do you think about student loan forgiveness plans in general, and the likely tax burden many people will face because of it?
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