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#1
11-01-2009, 08:02 PM
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Interest on student loans - Tax ?ions
I recently paid off Private student loan that was in default. Original balance was $4,000 which ballooned to $10,500. The CA (Collection Agency) the loan was assigned to accepted a lump sum of $8000 to settle the debt. I was wondering if I am now entitled to take a tax credit for the interest and fees ($4,000) for my federal tax return. If so, how much can I claim per year (does it roll over) and are the tax documents automatically sent to me by the CA, or do I need to request from CA and/or the original lender? Thanks in advance!
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#3
11-02-2009, 09:46 AM
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The lender will send you the interest statement. You will also receive a 1099 for the amount that they wrote off....which is probably a lot of interest. You will end up paying taxes on the settled portion.
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