Pharmacist & paying off student loans

[Maribeth]

Have a potential client come to the office. Just finishing pharmacy school. He is creating an S-corp and will be buying an existing pharmacy in August.

He tells me that in the pharmacist conventions that he has attended he has been told by "others" that his S-corp can hire him for 5 years and then pay off his student loans.

I told him that yes, the S-corp could pay off his student loans but that the amount would show up on his W-2.

Now I am wondering. I know that student loans can be forgiven if you do national service. (Anyone remember Northern Exposure?) But is there a way that your solely-owned company can pay off those loans for you and it be tax free?

[GeneInAlabama]

I have my doubts about someone just finishing pharmacy school and being able to succeed by immediately going into business for himself unless he has had prior business experience in a pharmacy. Just my opionion and has nothing to do with the original question.

[imjulier]

From pub 970

Student loan repayments made to you are tax free if you received them for any of the following:

• The National Health Service Corps (NHSC) Loan Repayment Program (NHSC Loan Repayment Program).

• A state education loan repayment program eligible for funds under the Public Health Service Act.

• Any other state loan repayment or loan forgiveness program that is intended to provide for the increased availability of health services in under served or health professional shortage areas (as determined by such state).

Just what I found right away which makes it sound like it has to be through a qualified program which an s-corp is not. I'll let you know if I find anything else.

[Maribeth]

Thanks so much. I appreciate the prompt response. It is that time of year when I seriously start to doubt myself