With tax time in full swing, we wanted to remind you that if you have been paying student loan interest over the previous year, do not forget to deduct that on your taxes!
Claiming Student Loan Interest on your Taxes 101
Student loan interest is a tax deduction that can be found in the “adjustments to income” section of tax form 1040 or 1040A. If you are using an online service to file your taxes (such as TurboTax), these services will typically ask you if “you have paid any student loan interest in the past year”, and then walk you through this deduction processes. You are allowed to take the student loan interest deduction even if you don’t itemize (or in addition to any itemized deductions), and you can deduct student loan interest on your own loans, your dependents loans, or if you file your taxes jointly, you can deduct your partners student loan interest as well.
Your student loan lender will (or should) send you a 1098-E form, and the amount of interest you paid on your student loans for the year will be reported on this form (1098-E) in box 1. If you’re lender did not send you a 1098-E form, contact them and inquire. Some lenders will not send out the form if the interest you paid was below a certain amount.
Next, you can report your student loan interest paid on Form 1040, Line 33 or on Form 1040A, Line 18 (again if you are using an online service, it should walk you through this), be aware however, the maximum amount of student loan interest you can claim as a tax deduction is limited to $2,500.
Lastly, the student loan interest deduction is limited by your total income. If your income is under $55,000 (or $115,000 for married couples filing a jointly), then you can deduct up to $2,500 in student loan interest. If your income is over $55,000 but under $70,000 ($115,000 to $145,000 for married couples filing a jointly), then your deduction for student loan interest will be prorated. If your income is over $70,000 ($145,000 for married couples filing a jointly), then your student loan interest is not deductible at all. So if you qualify, do not forget to deduct your student loan interest paid on your taxes.
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