At a time when parents are grieving the loss of their children, there may be another thing to consider—the tax bill that they may be receiving as a result of the children’s student loans. Regina Friend, the Maryland single mother of a deceased son, is facing this difficult situation.
Ms. Friend’s son, Roswell Friend, committed suicide in 2011 while a student at Temple University. Devastated by the personal loss, Ms. Friend must now deal with what she deems “salt in the wound”—the IRS tax bill for the student loan Sallie Mae discharged shortly after the death of her son.
According to the IRS, any loan that is discharged or forgiven is treated as income. Of the $55, 400 in loans that are now deemed income by the IRS, Ms. Friend must now pay $14,000 in taxes. The local newspaper, The Sun, reports that although student loans signed solely in the student’s name are forgiven upon death, as Roswell Friend’s were, loans signed by a parent or with a parent are subject to tax collection when discharged by the loan company.
This issue is not a new one. Several other families have faced this financial hardship in the face of the death of children. The article cites Francisco Reynoso as an example. Mr. Reynoso, a gardener whose income amounts to $21,000 a year, co-signed a loan with his now-deceased child. He was stuck with the remaining debt.
If you are dealing with a similarly tragic situation, it is sometimes necessary to get outside assistance to deal with the IRS. Contacting your competent tax attorney may help you when working with the IRS regarding your tax debt.
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