Some Canceled Student Loans Don’t Need To Be Reported, IRS Says

Certain discharged student loans don’t need to be reported to the IRS by lenders or loan servicers, the agency said Tuesday in a new notice.

When the discharge is excluded from a borrower’s gross income, the agency said, servicers or lenders shouldn’t file information returns or furnish payee statements. The pandemic-relief law signed in March 2021 changed the reporting requirement for taxable years 2021 to 2025. Typically, the IRS treats canceled debt as income.

• Under the law, gross income does not include any amount that would otherwise be included in gross income because of the discharge—in whole or in ...