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PSLF and state taxes

Started by nik_pa, January 27, 2021, 11:44:50 am

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nik_pa

Are amounts forgiven under the PSLF program taxable at the state (Pennsylvania) level? I know they are not taxable for federal income tax purposes but have not been able to find an answer to the state question. I have tried contacting the Pa. Dept. of Revenue but phone lines are impossible and they have not replied to the customer service question I submitted almost 2 months ago.

Any help would be appreciated.

TheCollegeInvestor

It appears that Pennslyvania does NOT conform with Federal law and does consider PSLF (and other student loan forgiveness) taxable income. I would check with an accountant in your state to confirm.

nik_pa

Than you, I have checked with one and they were unsure but thought the same. I am waiting to her from the Dept. of Revenue but I think they will confirm that Pa. does not follow the federal guidance and taxes the amounts.

nik_pa

February 18, 2021, 11:07:17 am #3 Last Edit: February 18, 2021, 11:48:07 am by TheCollegeInvestor
Just to update anyone else on this I finally received a reply from the Pa. Dept. of Revenue (I submitted the question December 10th). They confirm that loans forgiven under PSLF are taxable as the forgiveness is linked to employment.

"The student loan amounts forgiven under the Public Service Loan Forgiveness are subject to PA state income tax.  The loans are only forgiven for those individuals who agree to take a public service job. PIT Bulletin 2009-02. https://www.revenue.pa.gov/GeneralTaxInformation/TaxLawPoliciesBulletinsNotices/TaxBulletins/PIT/Documents/pit_bulletin_2009-02.pdf