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At this point this is a very early inquiry as to my

Hello, At this point...

Hello, At this point this is a very early inquiry as to my circumstance.

Accountant's Assistant: The Accountant will know how to help. Please tell me more, so we can help you best.

Didnt mean to send that yet.

Accountant's Assistant: Is there anything else the Accountant should be aware of?

Yes. I am planning on paying off 2 or more student loans for my daughter who no longer resides in this country. One of the loans I cosigned for and the other I did not. If I pay them both off at a greatly reduced amount per the creditors offer, will I be responsible only for the loan that I actually did cosign for as far as tax is concerned?

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Answered in 3 minutes by:
3/11/2018
Carter McBride
Carter McBride, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1,058
Experience: Adjunct Professor
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Hey! I'm Carter, I'm a CPA and can help you out.
Only the debtor who benefited from a loan claims the cancellation of debt as income. When an individual co-signs a loan, he or she may receive no actual benefit and simply be a guarantor. The Treasury distinguishes between a debtor and guarantor, which means a co-signor probably does not need to include the discharged debt in gross income.
So your daughter will be responsible for the tax. If she is insolvent at the time you pay it, i.e. more liabilities than assets, she will not owe any tax.
Let me know if you need anything else. If not, please leave a rating. Thanks!
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Customer reply replied 1 month ago
Ok. Does this vary by state ? I am in Ct. My daughter is abroad and will not be returning here to live or work. I'm happy to pay things off for her but am not in the situation to pay tax on 50k of debt for her. Thx
Nope. All the states conform to that same reading of who is responsible for the tax.
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Customer reply replied 1 month ago
As I said it is still very early in this process. I am consulting with an atty. on the payoff, then I will see where things go from there. I there a direct contact for you when I have something definite to proceed with ? Thx.
You can just request me again.
If you're all set, please leave a rating so I get credit for helping you out. Thanks!
Carter McBride
Carter McBride, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1,058
Experience: Adjunct Professor
Verified
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Hey! Just wanted to follow up to see if you needed anything else. If not, please leave a rating so I can get credit for helping you out. Thanks!

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