a colleague, a dentist, told me that his cpa deducts his student loan interest on his sole proprietorship tax form Sch C as a business expense. he said that since '10 his cpa uses the description in the expense box of "excluded student loan amount under 2010 health care act" Is this proper? I thought student loan interest deduction was limited to $2,500 and not as a direct business expense and also and went away once my income got too high. Is his cpa doing something that I should be doing on my tax return?

Zip Code: 02151

Hi. I'm not aware that people can now claim student loan interest on their Schedule C. That being said, the tax rules are pretty vast and quite fluid. Even so, my CPA firm works with thousands of physicians, dentists, and psychologists, many of which are self-employed and all of which are talking to their colleagues and reading in their journals about all sorts of topics including taxes, and no one else has brought this up to me previously, which makes wonder about it's validity.

Let me ask around and follow up when I have a more definitive answer.

Zip Code: 01801

OK. It looks like this person is twisting the rules.


Here is what the IRS says about this topic at: http://www.irs.gov/uac/Affordable-Care-Act-Provides-Expanded-Tax-Benefit-to-Health-Professionals-Working-in-Underserved-Areas


Affordable Care Act Provides Expanded Tax Benefit to Health Professionals Working in Underserved Areas

IR-2010-74, June 16, 2010

WASHINGTON — As part of a larger Administration announcement on efforts to strengthen the health care workforce, the Internal Revenue Service today announced that under the Affordable Care Act health care professionals who received student loan relief under state programs that reward those who work in underserved communities may qualify for refunds on their 2009 federal income tax returns as well as an annual tax cut going forward.

“Doctors and nurses who choose to practice in underserved areas make a great contribution to their local communities,” Commissioner Doug Shulman said. “By expanding the tax exclusion for student loan forgiveness, the Affordable Care Act provides an even greater incentive to practice medicine in areas that need it most.”

The Affordable Care Act included a change in the law, effective in 2009, that expands a tax exclusion for amounts received by health professionals under loan repayment and forgiveness programs. Prior to the new law, only amounts received under the National Health Service Corps Loan Repayment Program or certain state loan repayment programs eligible for funding under the Public Health Service Act qualified for a tax exclusion.

The Affordable Care Act expands this tax exclusion to include any state loan repayment or loan forgiveness programs intended to increase the availability of health care services in underserved areas or health professional shortage areas and makes this exclusion retroactive to the 2009 tax year.

Health care professionals participating in these programs who have reported income from repaid or forgiven loan amounts on their 2009 returns, possibly after receiving a Form W-2, Wage and Tax Statement, or Form 1099, may be due refunds. Those who believe they qualify for this relief may want to consult their state loan program offices to determine whether the program is covered by the new law.

Zip Code: 01801