Loan repayment and taxes

[Keona]

I'm interviewing for jobs currently with for profit private physician groups and some of them offer a bonus to use for loan repayment in a significant amount. Is there any way that anyone knows of or that has used to be able to apply the amount directly to loans without it being taxed at the high rate that exists for bonuses? As in is there some way to negotiate this into a contract?

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[deleted87716]

There's no way around the tax burden. The only thing you could try to negotiate is a larger sum, so that you get what you want after taxes. Good luck with that, though.

 

[VA Hopeful Dr]

There's no way around the tax burden. The only thing you could try to negotiate is a larger sum, so that you get what you want after taxes. Good luck with that, though.

If the employer pays the money to your lender directly, you don't pay taxes on it.

 

[deleted87716]

If the employer pays the money to your lender directly, you don't pay taxes on it.

Assuming you're not referring specifically to something like the National Health Service Corps Loan Repayment Program (which is tax-free), I don't think that's true. Can you cite a reference?

See link: https://studentloanhero.com/featured/job-sponsored-student-loan-payments-taxes/

 

[VA Hopeful Dr]

Assuming you're not referring specifically to something like the National Health Service Corps Loan Repayment Program (which is tax-free), I don't think that's true. Can you cite a reference?

See link: https://studentloanhero.com/featured/job-sponsored-student-loan-payments-taxes/

I'm going off the student loan repayment my wife got at her current job, which did not show up on our taxes and a job I've applied for which said they can repay student loans but not private loans.

Plus, why would jobs have separate loan repayment and signing bonus if they are treated the same, tax wise.

 

[F1rstGen]

I'm going off the student loan repayment my wife got at her current job, which did not show up on our taxes and a job I've applied for which said they can repay student loans but not private loans.

Plus, why would jobs have separate loan repayment and signing bonus if they are treated the same, tax wise.

Because they can file that as a non-payroll expense on their end and prevent inflating their payroll expenses. It is a positive for their accounting department but I'm not convinced it really matters on our end if we are given "loan-repayment" or extra salary. Loan repayment is still compensation so everything I've read and been told indicates that it is taxed at the normal personal income rate.

 

[deleted87716]

I'm going off the student loan repayment my wife got at her current job, which did not show up on our taxes and a job I've applied for which said they can repay student loans but not private loans.

Just make sure they're obeying the law, or else you could face a significant tax penalty in the future. I would recommend talking to an accountant.

 

[VA Hopeful Dr]

Just make sure they're obeying the law, or else you could face a significant tax penalty in the future. I would recommend talking to an accountant.

My accountant does my taxes and reviews our contracts for just such a reason.

The way it was set up is my wife gave the hospital her loan information and they cut a check directly to the loan company - she never saw it or had anything to do with it. That was our guess as to how this worked.

 

[goal-getter]

With my previous employer I received student loan repayment that was to be paid back with time.. ie work in the community for stated period of time. Yes beginning after the first year I did pay taxes on my student loan repayment ie on the principal amount, in addition to taxes on signing bonus. My student loan payment was made directly from my employer to the loan company. There is no way around it, they should provide her a print out at the end of the year disclosing tax liability.

 

[USCguy]

I believe it is illegal for them to not withhold taxes in these cases; whether it be a sign on bonus or a student loan repayment. For instance, the military pays directly to the lender but they withhold federal taxes from the payment so you are only getting 75% of initial amount applied. I believe the IRS issued a rule about this around 2011

If you get a lump sum, you can be sure there is a 1099 out there waiting for you.

I don't know if NHSC has special rules or not