Biden’s Loan Forgiveness Could Come Back To Haunt Students On Tax Day | Eastern North Carolina Now

    Publisher's Note: This post appears here courtesy of the The Daily Wire. The author of this post is Virginia Kruta.

    President Joe Biden's sweeping plan to forgive billions in student debt could come back to haunt the very students it was implemented to help - and soon.

    People who benefit from the plan - up to $10,000 in loan forgiveness for those making under $125,000 annually and up to $20,000 for Pell Grant recipients - could find themselves facing a state tax bill of up to $1,100 if the state in which they live fails to designate forgiven student debt as non-taxable income.

    According to an analysis from Tax Foundation, student borrowers in several states could see additional taxes - to the tune of $300-1,100 - unless their states take specific action to change the tax code before the end of the year.

    Typically, discharged debt is considered income both for federal and state tax purposes - but a special provision built into to President Biden's American Rescue Plan Act (ARPA) carves out forgiven student debt as an exception on federal tax filings. However, a number of states have not yet opted to conform to that provision - meaning that borrowers in those states could still be required to pay taxes on the forgiven amount as if they had earned it.

    And while the amount borrowers could potentially be taxed is only a fraction of what the forgiven debt might have been, the loan would have been paid off over time in smaller payments and the tax bill will be due in full on April 15. Additionally, a jump in annual income of $10,000-$20,000 could result in some student borrowers landing in higher tax brackets - thus possibly facing a higher tax rate for the remainder of their income as well.

    The states in which student borrowers are likely to face taxation on their forgiven loans are as follows: Arkansas, Minnesota, Mississippi, North Carolina, and Wisconsin.

    In at least two other states - California and Pennsylvania - officials have announced that despite any ambiguity still present in the state tax code, they will conform with the federal government's adoption of the ARPA provision and will not tax the forgiven amount.

poll#160

Are you in favor of the Joe Biden Executive Order, just weeks before the midterm elections, to shift the Higher Education debt, of up to $10,000.00 per individual, to the taxpayers of this Republic (estimated at 1/2 trillion)?

  Yes, it costs so much to go to college, and the right job is so hard to find in my focus of study.

  No, one's individual debt should be born by the beneficiary of that debt; certainly NOT by others that work to support their own families and pay their own debts, and their taxes.

  I am bereft of knowledge, so who cares?

456 total vote(s)     What's your Opinion?

poll#154

Inarguably, the policies of the Democrats in congress and Joe Biden as the Executive is plunging the United States into a recession, if we are not already there; a recession that was completely avoidable. Will abrupt changes in policies occur in time?

  Yes, the Democrats have a bold plan, yet to be revealed, to save us.

  No, there will have to be a complete undoing of the damage done by these Democrats.

  I can't do simple math, so how am I to understand the concept of basic economics.

1,216 total vote(s)     What's your Opinion?