The Unofficial SMART Scholarship Forum

I withdrew from the SMART program in 2014. Last year, in 2018, I finally heard from DFAS on the terms of debt collection. I owed a pretty penny and I paid all of it back last year, in one lump sum.

Over the course of my two years in the program (2012-2014), I paid over $10K in taxes on my stipend and internship support payments. This is money I paid on income that I didn't receive, as I ended up paying all of it back to the fed last year. I believe this should have been deducted from my taxes this year, but DFAS doesn't have a form 705 stating that my debt was taxable. This is clearly wrong but wondering if it's worth fighting and bringing a lawyer into it.

Has anyone else run into this issue?

Interesting question. I would contact an accountant. SMART really gives no help when it comes to taxes.

Any update on this? I'm curious as well. I thought they would've deducted the taxes out of the debt repayment, but if they didn't, you should be entitled to that money.

The closest thing to what you are looking for is IRC 1341.

Keep your documentation, including payment receipts, breakdown of debt, etc. The chance of being audited increases filing a 1341 claim of right credit.

Any update from anyone on this?

The SMART debtors' Discord is probably the best place to look for an answer: https://discord.gg/MEhgRRC

There appears to be language in the debt establishment notification letters lately (the letter you get from your Component letting you know that they've officially established your debt) that has some information regarding recouping taxes. Looks like DFAS can provide you some form that you or your accountant can use to show you've paid back previous income. It seems like you'd have to ask DFAS for it though. If your debt hasn't been established yet, and DFAS hasn't yet sent you a collection letter, then you may just have to wait a bit.