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Can I Deduct The Interest On Student Loans
Generally speaking, student loan interest is deductible. This means that you can subtract the total amount of student loan interest you had to pay during the year from your taxable income and get taxed solely on the remainder. If you have a large student loan payment every year, this can end up being a sizable deduction.
If you are unsure how to find out how much student loan interest you've paid, contact your loan provider around tax time. Loan providers usually send out a form 1098-E each February with your student loan information. This will give you time to file your taxes before the deadline in mid-April. If your student loan situation is more complicated, contact a qualified tax attorney as soon as possible for help with student loan interest deduction.
Specific Regulations Regarding Student Loan Interest Deduction
Generally speaking, it is easy to deduct student loan interest. If you're using special tax preparation software, simply choose that option and fill in the interest amount to deduct. If you're filing on your own, fill the interest amount into your general 1040 form under "Adjustments to Income." It is important to note that you do not need to take itemized deductions to deduct your student loan interest.
According to IRS rules, you may only deduct student loan interest if:
- You paid student loan interest during that tax year
- Your student loan contract required you to pay interest on the student loan
- Your filing status is either single or married filing jointly
- Your adjusted gross income is less than a specific amount, usually around $75,000 or $150,000 for married filing jointly.
- You are not a dependent on someone else's tax return. If you're filing jointly with your spouse, your spouse cannot be a dependent on someone else's return.
If you make over $60,000 but under $75,000 annually, your student loan deduction will be pro-rated. Students who just finish college, have part-time work, but still depend on or live with their parents may not be eligible for this deduction. Talk to your parents and tax lawyer to determine if it is best for parents to claim you as a dependent or for you to claim various deductions that could result from not being a dependent.
A tax lawyer can help you make the right choices with student loan interest deductions. Contact one today!