While many taxpayers may be excited about the prospect of reduced loan balances as part of Biden’s Loan Forgiveness Program, they may have questions about the potential tax consequences of that forgiveness. Under normal circumstances, creditors that discharge debt issue a corresponding Form 1099-C Cancellation of Debt to the debtor for inclusion in that year’s income. While the administration works out the kinks in the loan forgiveness plan, it’s important to understand the current provisions of the Internal Revenue Code and the general principles that govern these situations. Read on to learn more.
Amy Lazas is the owner of Providence Law Group, LLC., where she works with clients in the areas of estate planning and administration. Prior to her legal career, Amy worked in large corporate organizations for over 20 years marketing and selling products and services. She also managed corporate partnerships in the U.S. and Internationally.
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