Tax question on state of Michigan Student Loan Discharge

Meg37

New Member
Jurisdiction
Michigan
I receive disability. I was just approved for a loan discharge for total and permanent disability. The papers they sent stated that the loan discharge total will not be taxed as income federally but could for certain states

I live in Michigan. Im not a veteran. I can't find information on whether or not Michigan will consider it as taxable income. My loan was for 35k. I have searched for an answer, including Michigan.gov treasury website and haven't been able to find an answer

If it is taxable I am also not sure if my father will still be allowed to claim me as a dependent. I don't get enough in ssdi to have to file taxes. He claims me because I live with him and he has helped me out alit financially. I'm thinking he won't be able to

Thanks for any help or info
 
I think the answer is quite simple. Take a look at the Michigan tax return form:

https://www.michigan.gov/documents/taxes/MI-1040_642214_7.pdf

Line 10 - starts with your federal AGI. Lines 11 and 13 adjust for Michigan Schedule 1 which does not ask about debt cancellation nor does Page 12 of the instruction booklet nor do I find anywhere else in the booklet that mentions debt cancellation.

https://www.michigan.gov/documents/taxes/MI-1040_Book_no_forms_642357_7.pdf

If your cancelled debt does not have to be included as income on your federal taxes, it doesn't appear to have to be included in your Michigan taxes.

However, in case I have missed something, I strongly suggest that you and your father have your taxes done by a tax pro for 2019 just to be sure.
 
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