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Frequently Asked Tax Questions And Answers
Keyword: Student Loan Interest Deduction
3.2 Itemized Deductions/Standard Deductions: Education & Work-Related Expenses
Can I take a deduction for the interest I paid on my student loan?
Starting in 1998, taxpayers who have taken out qualified loans to pay certain
costs of attending an eligible educational institution for themselves, their
spouse, or their dependent are allowed to take a deduction from gross income
for the interest they paid on these student loans. Prior to 2002, deduction
of student loan interest was limited to the first 60 months of required interest
payments, and, was subject to income limitations. Beginning in 2002, interest
paid over any period of time on a qualified education loan is deductible.
There are also income limits. For more information, refer to Publication 970, Tax
Benefits for Education; and Tax Topic 456, Student Loan Interest
Deduction.
References:
What are the limits for deducting interest paid on a student loan?
The maximum deductible interest on a qualified student loan is $2,500 per
return. If you are a taxpayer whose return status is married filing jointly,
you are allowed to deduct the full $2,500 only when your Modified Adjusted
Gross Income (MAGI) is $100,000 or less. If your MAGI is between $100,000
and $130,000, the amount of your student loan interest deduction is gradually
reduced. The instructions for Form 1040 (PDF) show
you how to compute the deduction. If your MAGI is $130,000 or more, you are
not able to take any deduction.
For those whose filing status is single, head of household, or qualifying
widow(er), the full $2,500 deduction is allowed for MAGI levels equal to or
below $50,000. For MAGI between $50,000 and $65,000, the deduction amount
is phased out, and computation instructions are provided in the
Instructions for Form 1040. If your MAGI amount is, $65,000 or more,
there is no deduction.
There is no deduction if you file as married filing separately, if you
are claimed as a dependent, or if the loan is from a related party or a qualified
employer plan. For more information, refer to Publication 970, Tax
Benefits for Education ; Tax Topic 505, Interest Expense ;
and Tax Topic 513, Educational Expenses .
References:
Is the $2,500 maximum deduction for student loan interest per PERSON,
or per RETURN? I am married filing jointly, and have paid over $3,000 of qualified
interest payments for my husband and I. Are we allowed to deduct $5,000 ($2,500/person)
or only $2,500 total on our return?
The deduction is limited to $2,500 per return for tax year 2001 and beyond.
If you file as "married filing separately," there is no deduction. For more
information, refer to Publication 970, Tax Benefits for Education;
and Tax Topic 505, Interest Expense.
References:
If I file married filing separately can I claim the student loan
interest deduction?
No, you cannot claim the deduction in any tax year in which your filing
status is "married filing a separate return." For more information, refer
to Publication 970, Tax Benefits for Education, Tax Topic 505, Interest
Expense; and Tax Topic 513, Educational Expenses.
References:
I am a parent repaying a loan for my daughter's college education.
The loan is a parent's loan taken out in my name. Is the interest deductible
on my tax return?
If your daughter was your dependent when you received the loan, the interest
you paid on the loan is deductible, provided all other requirements are met.
For more information, refer to Publication 970, Tax Benefits for Education; Tax Topic 505, Interest Expense; and Tax Topic 513, Educational
Expense.
References:
My mother borrowed money for my college education. Now that I'm
out of school, I make the monthly payments, but the loan is under her name.
Can I take the student loan interest deduction since I'm actually making the
payments?
You will not be able to take a deduction for the student loan interest
that you pay because you are not the one obligated to pay on the loan. However,
your mother may take the deduction, provided all other requirements for the
deduction are met. The payment made by you is treated as a gift to her, and
then a payment by her. For more information, refer to Publication 970, Tax
Benefits for Education; Tax Topic 505, Interest Expense;
and Tax Topic 513, Educational Expenses.
References:
Last year, my parents took out a student loan for me in their name
and I also took out a student loan. My parents received Form 1098-E for their
loan and I also received Form 1098-E for my loan. Can we both claim the interest
from the loans on our tax returns? Last year, I was not their dependent.
In order for a taxpayer to claim a deduction for student loan interest,
the loan must be incurred for the taxpayer, the taxpayer' spouse, or a person
who was the taxpayer's dependent when the taxpayer took out the loan. Since
you were not your parents' dependent when they took out the student loan,
the interest they paid on the loan does not qualify for deduction. However,
the student loan interest payments you made on the student loan you took out
on your behalf are eligible for deduction, provided all the other requirements
are met. For more information, refer to Publication 970, Tax Benefits
for Education; Tax Topic 505, Interest Expense; and Tax Topic 513, Educational Expenses.
References:
7.4 Child Care Credit/Other Credits : Hope & Life Time Learning Educational Credits
I did not attend school this year, but made loan payments on a loan
I previously took out to pay my college tuition. Can I claim a lifetime credit
for the money I used to repay the loan?
No, payments on your student loans do not qualify for the Lifetime Learning
Credit. However, interest on student loans may be deductible for Federal income
tax purposes if you meet certain conditions. For more information, refer to Publication 970, Tax Benefits for Education.
References:
14.5 Electronic Filing (e-file) and TeleFile: TeleFile
Can I TeleFile or e-file if I am deducting student loan interest?
You cannot use TeleFile if you are claiming the student loan interest deduction.
However, you can e-file by personal computer or by filing through an Authorized
IRS e-file Provider. To learn more, refer to our Electronic
Services information. For general information about TeleFile or e-file, refer
to Tax Topic 255, TeleFile, or Tax Topic 252, Electronic Filing.
References:
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