My wife became disabled in 2013 and we were told her student loans were going to be discharged because of it. Can I lose my tax return?

And as you should all ready know the extension will end in October 2014 so you really should be working on getting your 2013 1040 FIT return ready to file for that purpose and time.

With the education loans in default status YES it is possible that the BFS taxpayer offset refund program could come into play during this 2014 tax filing season for that purpose.

Hope that you find the above enclosed information useful. 07/26/2014

Contact the Dept of ED for official word - they should send documentation, to make sure it's done. The loans have to be out of default status. Otherwise you can claim injured spouse Form 8379 when you file & this will protect you or at least part of your refund..

http://www.irs.gov/uac/Seven-Facts-about-Injured-S...

http://www.irs.gov/uac/Form-8379,--Injured-Spouse-...

Your extension to file was for 6 months, I would make sure first - she should call the Dept of Ed & ask about the status of her.loans & whether the debt has been discharged yet. I assume you filled out the appropriate paperwork & applied for discharge based on her disability. She needs to find out if it's been approved & what the status of her loans are.

Good Luck

Cathi brought up a very valid point. If the Dept of Ed forgives the debt, it will be taxable income to your wife. She really needs to find out the status of her ed loan . If it's in default, file injured spouse or MFS. If you live in a community property state, dif rules apply. She will get a 1099 C when the debt is canceled - perhaps more than one. Did she have any state ed debt? Is all the debt consolidated? If she can prove insolvency (bankruptcy) or **if** congress changes the laws soon which are extremely unfair to disabled individuals, she may not have to pay tax on this. MFS is an option is you aren't taking EIC or other credits or deductions not allowed to couples claiming MFS status. You can still file injured spouse when the debt is cancelled if it doesn't benefit you to file MFS; but a lien may be put on any property her name is on & they may take a percentage of her ss disability check too.

Your wife becoming disabled has nothing to do with losing your tax return. You should keep a back up copy for your records anyway.

When they forgive the debt it becomes taxable income. If you don't pay the taxes they can take your refund. It is cheaper to pay the taxes than pay the full amount.

If the loans are in default, they can take the refund.

Yes, the refund can still be offset if she has defaulted.

who told you? someone with some authority or did you get it in writing?