As an incentive to employment my company is making a large lump sum payment towards my student loan debt, lets for this example say $5,000 (the real amount is different). They have inquired about my guarantor and wish to send the amount directly to them. I had planned on paying off my private loans because of higher interest rate.
1.) Do I need to claim this as personal income (of which income tax will reduce that amount), or is there another way?
2.) Since I have federal loans based on income contingency, this will potentially artificially inflate my net income making next years monthly payments higher than what I actually can afford?
My question is does my company need to report this as income, and I would need to claim taxes on it. If so, what can I do to not bump up my income contingency? Should I not allow my company to pay the full amount to the guarantor?
Thanks in advance.
I called my guarantor explaining the situation that my net income will be different than my actual yearly income due to this being a "bonus" and they said instead of including W-2 as normal to include a paystub that shows my bi-weekly salary and that they will adjust according to that.