It’s that time of year! Tax time is always a stressful time, particularly for student loan borrowers, who already have massive bureaucracies and administrative headaches to contend with on a regular basis. But tax time can also be a useful opportunity for student loan borrowers to take stock of their student debt, their options for managing it, and potential pitfalls to be wary of. Here are some tips for this year as we enter tax season.
Disability Discharges For Federal Student Loans Are Now Tax-Free
Up until 2018, discharges of federal student loans on the basis of the borrower’s total and permanent disability were treated as taxable. In other words, the discharged student loan could be viewed as “income” that the borrower earned during the year in which the debt was cancelled; the borrower would then have to be income taxes on that canceled debt. However, thanks to recent legislation, any federal student loan disability discharges that were granted as of January 1, 2018 should no longer be taxable under federal law.
The Tax Cuts and Jobs Act was the biggest overhaul to the U.S. tax code in decades, and it made some significant changes to the tax deductions that are available. Many tax deductions were kept intact, but others were modified, and some were eliminated entirely.
There are also several different types of tax deductions, and these can get a bit confusing. For example, some tax deductions are only available if you choose to itemize deductions, while others can be taken even if you opt for the standard deduction. With all that in mind, here’s a rundown of what Americans need to know about tax deductions as the 2019 tax filing season opens.
It was an unusually active year on the tax front in 2018 because dozens of new tax rules took effect that dramatically changed the way people get taxed on their income. Although investors have seen all year the impact of lower corporate tax rates in the stocks they follow, the beginning of 2019 will be the first chance that many taxpayers get to see just how large of an impact tax reform had on the amounts they have to pay to Uncle Sam.
As the new year begins and tax season approaches, there are several things you should keep in mind. Some of these tried-and-true techniques have been around for years, but some will work particularly well because of all the recent changes. Follow these tips and you’ll be in a better position to make the most of tax reform and save as much as you can on your returns.
Taxpayers have a number of deadlines they have to meet every year. Many of them wait until the last minute to complete their tax returns or file for extensions, facing the danger of costly penalties if they don’t get things done in time.
You don’t often hear about the IRS needing an extension to get its part of the tax puzzle completed, but that’s exactly what could happen this year. The magnitude of changes to the tax laws over the past year has made the Internal Revenue Service’s job a lot more complicated this year, and according to a recent report from a government official charged with oversight responsibility for the IRS, the tax agency could have a tough time starting the 2019 tax season on time.