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Andrew Schwartz CPA
Aug 5, 2005 - 4:22AM
Re: STUDENT LOANS

My understanding is that the corporation can deduct payments of student loans made on behalf of an employee, but the employee would have to pick up that amount as income on their W-2 form. The payment of the loans is another form of compensation for services provided by an employee.

Perhaps the corporation can make a loan to the employee which is forgiven over time. So instead of reporting the income all in one year, the employee will report income as the loan is forgiven. You need to be careful that this strategy doesn't cause the corporation to get stuck with taxable income, however.

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