Settlement will pay off student loans. Is this taxable? As per terms of a settlement, the school I attended will be paying my loans off in full directly to my loan provider. My lawyers asked me to fill out a W-9 for the school and the loan provider before they will pay the loans off. No money is coming to me as they are dealing with one another. My lawyers say that they cannot issue any tax advice and they cannot say if there will be tax ramifications. I have consulted the IRS and tax preparers; to which they all asked if I would be receiving a 1099. The lawyers don't know the answer to this.
Is this a taxable situation for me even though it's not income or debt forgiveness?
My understanding of debt forgiveness is that the loan provider writes off the debt and cancels your debt to them. In this case, they are being paid by someone else to satisfy my debt.
How would I find out what my tax liability was IF I am being issued a 1099? In other words, will this be something I owe taxes on the end of the tax year even though I did not receive any money? |