Through December 31, 2017
Gross income generally includes the discharge of indebtedness of the taxpayer. Under an exception to this general rule, gross income does not include any amount from the forgiveness (in whole or in part) of certain student loans, if the forgiveness is contingent on the student’s working for a certain period of time in certain professions for any of a broad class of employers.
Effective for tax years beginning after December 31, 2017
For discharges of indebtedness, certain student loans that are discharged on account of death or total and permanent disability of the student are also excluded from gross income.
As student loans increase, this addition will assist taxpayers who become disabled or pass away. Although not clear, this new law does not appear to affect the lender’s ability to continue to collect the amounts from co-signers or guarantors.