Section 1 Short title
This Act may be cited as the “Student Loan Forgiveness Tax Repayment Act of 2014”.
Student Loan Forgiveness Tax Repayment Act of 2014
A BILL
To amend the Internal Revenue Code of 1986 to allow certain discharged student loan debt to be included in gross income ratably over 15 years and to disregard such income in determining eligibility for Federal means-tested programs.
Sec. 2 15-year ratable inclusion of cancelled student loan debt
In general— Subchapter Q of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new part:
“VIII Ratable inclusion of certain income
“1351A. 15-year ratable inclusion of cancelled student loan debt
“(a) In general—In the case of any individual who elects the application of this section for any taxable year, any amount which (but for this section) would be includible in gross income for the taxable year by reason of the discharge (in whole or in part) of any student loan (as defined by section 108(f)(2)) by reason of death or disability shall be so included ratably over the 15-taxable-year period beginning with the taxable year of such discharge.
“(b) Limitation based on modified adjusted gross income
“(1) In general—The amount taken into account under subsection (a) shall not exceed the amount which (but for this subsection) would be so taken into account, reduced by the excess (if any) of—
“(A) the modified adjusted gross income of the taxpayer for the taxable year of the discharge, over
“(B) $80,000 ($160,000 in the case of a joint return).
“(2) Modified adjusted gross income—The term modified adjusted gross income means the adjusted gross income of the taxpayer for the taxable year determined—
“(A) without regard to this section and sections 911, 931, and 933, and
“(B) after the application of sections 86, 135, 137, 199, 219, 221, 222, and 469.
“(c) Special rules
“(1) Death of student—In the case of any discharge of a student loan by reason of the death of an individual to whom the loan was made, no election under this section may be made by or on behalf of such individual.
“(2) Election—Any election made under this section, once made, shall be irrevocable.”
Conforming amendments—
Sections 86(b)(2)(A), 135(c)(4)(A), 137(b)(3)(A), 221(b)(2)(C)(i), 222(b)(2)(C)(i) are each amended by striking “and 933” and inserting “933, and 1351A”.
Section 199(d)(2)(B) of such Code is amended by inserting “and section 1351A” before the period at the end.
Section 219(g)(3)(A)(ii) is amended by striking “and 911” and inserting “911, and 1351A”.
Section 469(i)(3)(F)(iii) of such Code is amended by striking “and 222” and inserting “222, and 1351A”.
Clerical amendment— The table of parts for subchapter Q of chapter 1 of such Code is amended by adding at the end the following new item:
Effective date— The amendments made by this section shall apply to discharges of indebtedness after the date of the enactment of this Act.
Sec. 3 Student loan debt cancelled by reason of death or disability disregarded for Federal mean-tested programs
The discharge of any student loan (as defined by section 108(f)(2) of the Internal Revenue Code of 1986) by reason of death or disability, and any income attributable thereto, shall be disregarded for purposes of determining eligibility for any Federal means-tested program.