Welcome Guest. Register Now!  



Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 02-07-2013, 09:57 PM
Junior Member
 
Join Date: Feb 2013
Posts: 1
Cancelled Studen Loan -Education Credit?

I received a 1099-C for cancellation of a student loan due to disability. The loan was from 1984. I know I have to claim it as income, but my question is if I may take any education tax credits for it? Technically if they are charging me $7700 for tuition, then can I take a tax break on the tuition? I know its not the year I went to school, but it is the year I "paid" the money. Also, included in that $7700, $2800 of it is interest. Is the interest deductible? Why else would they break it down on the 1099 C like that?



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 02-08-2013, 04:12 AM
Moderator
 
Join Date: Oct 2010
Posts: 5,258
“I received a 1099-C for cancellation of a student loan due to disability. The loan was from 1984. I know I have to claim it as income,”====>In general yes; Student loans are usually non-dischargeable EVEN in bankruptcy. This means that after your bankruptcy erases all your other debts, you still have to pay student loan debt. If you fall nine months behind, your lender can call the whole loan due at once. Filing bankruptcy can be an option in only one circumstance.The law lets you eliminate your student loans if paying them creates an "undue hardship" for you and your family. The government can take some federal benefit payments (including Social Security retirement benefits and Social Security disability benefits, but not Supplemental Security Income) as reimbursement for student loans.The government cannot take any amount that would leave you with benefits less than $9k per year or $750 per month. And, it cannot take more than 15% of your total benefit.For example, ifyiu receive monthly federal benefits in the amount of $900, the government may take either $150 (the amount of your $900 benefit that is over $750) or $135 (15% of yourtotal benefit of $900), whichever is less. So, in this case, the government can take only $135 each month; The government and private lenders can sue you to collect defaulted student loans. Unlike other debts, there is no time limit on suing to collect student loans -- you can be sued indefinitely.
“but my question is if I may take any education tax credits for it? “======>it depends in claiming AOC/lifetime earning credit or etc paid on defaulted student tloan s you can claim the AOC/LLC, even if you use a student loan to pay for 100% of your college expenses.; until 2012, the irs subsidizes some of the cost of most student loans with a deduction on student loan interest. However, just having a student loan does not necessarily qualify you for this deduction. If you defaulted on a student loan, for example, you may or may not be able to take this deduction, depending on the payment history of the loan. You can deduct all interest paid on a student loan during year, regardless of whether you defaulted during the year. For example, if you missed your January 2011 payment and paid it in February, you can still deduct the interest on your 2011 tax return. If you default on the student loan for the entire year, you can only take the interest deduction the year in which you actually paid interest. If you default and made no interest payments for the year, you cannot take this deduction. Even if you paid interest on a defaulted student loan during the year, you might not be able to take this deduction. You must have used the student loans for a qualified educational expense -- typically required tuition, fees and supplies. So I meanYou may be able to deduct interest you pay on a qualified student loan. Generally, the amount you may deduct is the lesser of $2.5K or the amount of interest you actually paid. The deduction is claimed as an adjustment to income men aon 1040 line 33 so you do not need to itemize your deductions on Form 1040, Sch A. You can claim the deduction if you paid interest on a qualified student loan in tax year ;you are legally obligated to pay interest on a qualified student loan ;your filing status is not married filing separately;your modified adjusted gross income is less than a specified amount which is set annually, and you and your spouse, if filing jointly, cannot be claimed as dependents on someone else's return . A qualified student loan is a loan you took out solely to pay qualified higher education expenses.


“Technically if they are charging me $7700 for tuition, then can I take a tax break on the tuition?”==========>I guess you need to read above. In general, you can deduct yur student loan interest exp( as I assume that yo paid the loan 100% out of pocket money), you can deduct up to $2.5K;and you can ALSO claim either AOC(up to $2.5K) or LLC up to $2K; however, yo can’t claim both of them at the same time. You may be able to deduct qualified tuition and related expenses that you pay for yourself as a tuition and fees deduction. You do not have to itemize to take this deduction. Instead of a tuition and fees deduction, you may be able to claim tuition and fees as (1) an American Opportunity credit or Lifetime Learning credit; or (2) if applicable, a business expense, which is generally an itemized deduction. If you claim qualified tuition and fees as a tuition and fees deduction, the deduction is taken as an adjustment to income on Form 1040 .
“ I know its not the year I went to school, but it is the year I "paid" the money. Also, included in that $7700, $2800 of it is interest. Is the interest deductible? Why else would they break it down on the 1099 C like that?”=========>as said above you may deduct is the lesser of $2.5K or the amount of interest you actually paid



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply



Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Amending Taxes for Education Credit Mister_YumYum Miscellaneous 1 05-30-2011 09:55 PM
1099-c Cancelled credit card lanalang08 Income 1 03-16-2011 05:48 AM
Disaster relief education tax credit shamu27 Miscellaneous 0 01-28-2010 04:50 PM
Tax Credit Helps Pay for Higher Education Expenses Samatg For 2009 0 01-20-2010 11:26 PM
What is the best loan to fund my college education? TaxGuru Education Planning 0 06-16-2009 10:27 AM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning
 
 
 

» Recent Tax Q&A
No Threads to Display.