The cancellation of student loan debt will have absolutely no effect on your 2022 federal income tax return.
The American Rescue Plan Act
excluded student loan debt forgiveness from federal taxable income for tax
years 2021 through 2025. The recently announced cancellation of student loan debt will NOT be taxed as cancellation of debt income on
2022 federal returns.
However, the cancelled student loan
debt could be taxed on state income tax returns in Arkansas, Connecticut,
Hawaii, Idaho, Illinois, Iowa, Kentucky, Massachusetts, Minnesota, Mississippi,
Pennsylvania, South Carolina, Virginia, West Virginia, and Wisconsin. FYI - New Jersey does not tax cancellation of
debt.
TTFN
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