IRS seeks loan taxes from family of dead Marine

IRS seeks loan taxes from family of dead Marine
By Rick Maze
Staff writer
Posted : Tuesday May 1, 2012

A Tennessee lawmaker is trying to protect a Marine’s parents from having to pay taxes on student loans that were waived after the Marine’s death.

Lance Cpl. Andrew Carpenter died in 2011 in Germany from injuries suffered when he was shot by a sniper in Afghanistan. The 27-year-old, who had attended college before enlisting in the Marine Corps, died with outstanding student loans from a private lender. The lender waived the debt, but family was notified by the Department of Education that the waived debt was considered as income for tax purposes.

While the survivors never expected it, IRS policy holds that forgiven debt on credit cards, personal loans and student loans is treated as income, just like wages — and taxable, just like wages.

Rep. Scott DesJarlais, R-Tenn., a freshman lawmaker representing Carpenter’s hometown of Columbia, Tenn., is trying to help the Carpenter family and ensure similar situations don’t happen to other military families.

“It is simply not right to require the families of deceased veterans, having already sacrificed so greatly for our country, to pay more in taxes for loans that have already been forgiven,” DesJarlais said.
read more here