I understand that student loans discharged due to Total Permanent Disability (TPD) are considered taxable income. I am permanently disabled,...

Question

I understand that student loans discharged due to Total Permanent Disability (TPD) are considered taxable income. I am permanently disabled, I receive 1k monthly in Social Security Disability. My student loan exceeds 100k. If my loan were to be discharged under the TPD provision I would not be able to sustain the tax burden. Is there a tax exemption for persons who live below the poverty line in this regard? What about the Insolvency Exclusion? What can I do to ease the pain? Your wisdom regarding this matter is greatly appreciated.

Thanks,

Perplexed

Answer

Under certain circumstances if a student loan is cancelled, it will not result in taxable income. Check Publication 970 at the IRS web site (IRS.GOV) for further information.