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Your Financial House: Tax Implications on Loan Repayment Programs

Your Financial House: Tax Implications on Loan Repayment Programs

You worked your way through years and years (and years) of college to become a professional in the health care industry. You’ve found your perfect job in the right practice. Hopefully your professional dreams are coming true, but don’t forget about those student loans that have accumulated over those college years. Even though the amount may be terrifying there’s a way to help repay those loans while helping serving communities in need.

Use your education, skills and experience to give back to the community while also repaying your student loans. There are many healthcare provider loan repayment programs in Colorado. These programs offer generous student loan repayment in exchange for your service at clinical practice sites caring for people in greatest need. The program emphasizes long-term retention of health professionals in underserved communities and seeks to increase health equity. You’ll need to confirm with you current provider that they agree to participate in areas with a health professional shortage, but this is a great way to reduce or eliminate those high educational loans.

There are tax implications to these loan repayment programs: Here is the pertinent section of tax law that says the repayments are excludable:

  • Education loan repayments received in taxable years beginning after 2003 and provided by:

    • The National Health Service Corps Loan Repayment Program (under which the recipient of the loan repayment is obligated to provide medical services in certain geographic areas); or

    • State programs eligible for funds under the Public Health Service Act; and

  • Education loan repayments received in taxable years beginning after 2008, provided by any other state loan repayment or loan forgiveness program that is intended to increase the availability of health care services in areas that the state determines is underserved or has a shortage of health professionals.

Your dedicated financial planning and tax services experts at KKB can help clarify any loan repayment questions for the upcoming tax season. We’re also ready to answer any questions that you may have on tax and wealth management planning for the New Year. We’ll take care of the taxes while you enjoy time with your families.

What questions, concerns or feedback do you have regarding taxes on your healthcare provider loan repayment program? Connect with us on Facebook or contact us today to learn more.


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