california tax: Did You Know NHSC Loan Repayment Awards Are Exempt Under California Law?

September 2009 - National Health Services Corps (NHSC) loan repayment program provide payment of student loans for participants who provide certain services in areas where shortages of these services exist.

Funded by $200 million in American Recovery and Reinvestment Act funds, the NHSC is accepting applications until funds are expended or September 30, 2010, whichever comes first. You may have a client that will qualify to exclude amounts they received to repay their student loans in exchange for two years serving in a NHSC approved service site.

The "American Jobs Creation Act of 2004" (H.R. 4520, P.L. 108-357), enacted on October 22, exempts NHSC loan repayment awards from federal income taxes. California law (see R&TC Sections 17131 and 17024.5) also exempts NHSC loan repayment awards from California income taxes.