How To Use An LLC To Pay Student Loans

Yes, your LLC can repay your student loans but only under some specific conditions, here are some of them:

For Sole proprietorships, Partnerships, C & S Corporations

1. If your LLC is a sole proprietorship, yes, but you can’t deduct the payments as business expenses.

2. If your LLC is a partnership, yes, but you can’t deduct the payments as business expenses. The payments would be distributions to you, to the extent you have basis to cover them.

3. If your LLC is a C-corporation, no. Taking money out of a C-corp for personal expenses is either taxable compensation to you, or a loan that you have to pay back, or possibly redemption of stock.

4. If your LLC is an S-corporation, same answer as partnership. If there are other shareholders, they have to get proportional distributions too. If you don’t have enough basis, then see the C-corp answer.

Basically you can only use an LLC to pay your student loans if it is a sole proprietorship, partnership or an S-corporation if you have enough basis.