Per the state instructions, "Effective for taxable years beginning on and after January 1, 2015, a subtraction is allowed for income attributable to the discharge of a student loan due to the student’s death. For purposes of this subtraction, “student loan” means the same as the term is defined under IRC § 108(f)."
The loan must have been made to an individual to assist that person in attending an educational institution. According to the instructions the loan must have been made by:
- The United States, or an instrumentality or agency thereof;
- A state, territory, or possession of the United States, or the District of Columbia, or any political subdivision thereof;
- Certain tax-exempt public benefit corporations that have assumed control over a state, county, or municipal hospital and whose employees are deemed public employees under state law;
- Charitable educational organizations, if the loan was made: pursuant to an agreement with one of the above-listed entities; or pursuant to a program designed to encourage its students to serve in occupations or areas with unmet needs, and under which the services provided by the students are for or under the direction of a governmental unit or certain tax-exempt organizations.
Where do I enter it?
- State Section
- Virginia Return
- Subtractions from Income
- Other Subtractions
- Add Other Subtractions Amount
- Select Discharge of Student Loans (from the drop-down menu)
What else do I need to know?
Private loans or loans already excluded from federal tax do not qualify for this subtraction.