Issue 45  September 21st 2022

Student Loan Forgiveness - Update

The US department of Education has announced a few weeks ago a three-part plan to help working- and middle-class federal student loan borrowers to transition back to regular payment as pandemic related support expires.

First Part - Final extension of loan repayment through December 31, 2022.
Second Part - Providing targeted debt relief to low- and middle-income families. Up to $20,000 in student loan will be forgiven if individual borrower makes less than $125k or $250k if you are married.
Third Part - Make the student loan system more manageable for current and future borrowers.

The application process for loan forgiveness should open starting early October of 2022. You MUST apply to get whole or part of the loan forgiven. That bill had a provision that exempts all federal student loan forgiveness from taxation through the end of 2025. This means no one should have to pay any federal income taxes on any federal student loan forgiveness if it occurs prior to January 1, 2026. The loan forgiveness will not be taxable on Federal tax return while states are still working on figuring out if they should follow federal or if they should tax loan/debt forgiveness. Because Louisiana largely conforms to federal tax law for purposes of individual income tax amounts that are exempt from federal tax will automatically be exempt from Louisiana tax without further action, (Louisiana Revenue Information Bulletin No. 22-017, 09/14/2022.)

Penalty Relief for Taxpayers Filling 2019 & 2020 Returns

The Internal Revenue Services is providing penalty relief to certain taxpayers who filed their 2019 & 2020 tax returns late. For income tax filers to qualify for this penalty relief, an eligible income tax return must be filed on or before September 30, 2022. Eligible tax returns include: Form 1040 U.S. Individual Income Tax Return, Form 1020 U.S. Corporation Income Tax Returns, U.S Income Tax Return for an S Corporation, Form 1065 U.S. Return of Partnership Income, and estate and trust income tax returns. Eligible return filers don’t need to apply for this relief. If the IRS has already assessed a late-filing penalty, it will be abated. American Institute of Certified Public Accountants has requested that the IRS expands, modify, and clarify the scope of the relief as well as extend the relief deadline from September 30 to December 31. For more details click on the link below.

Can I deduct Health Insurance Premium payments?

There are two ways you could possibly qualify to get the deduction for health insurance premiums.

1) If you itemize your deductions for a taxable year on Schedule A (Itemized Deductions), you may be able to deduct expenses you paid for medical insurance for yourself, spouse, and your dependents. You may deduct medical expenses only if you itemize and if the amount of your total medical expenses exceed 7.5% of your adjusted gross income (AGI). To simplify: if your adjusted gross income is $100,000 you would be able to deduct medical expenses including medical insurance premiums in excess of $7,500. If your medical expenses for the year were $10,000 you would be able to deduct $2,500 as part of your itemized deductions.

2) If you are self-employed and have net profit for the year you may be eligible for the self-employment health insurance deduction which would be an adjustment to income, rather than itemized deduction.

For more details as to what qualifies as medical expense click on the link below.

Louisiana Senior Property Tax Freeze – Special Assessment

The state of Louisiana allows homeowners residents to put a freeze on their property taxes once they reach age 65. To qualify you must be age 65 or older and have made less than $100,000 in adjusted gross income. The property tax freeze does not exempt an individual from paying property tax, but it lets them freeze the property value which means even if your property increase in value next year and year after next they will still pay the same in property taxes. For more information click on the link below.