Deductible Student Loan Interest
Take an Axe to Your Taxes
You may be worried about the amount of debt you have accumulated in student loans. However, there are some tax benefits to having student loans. Some, if not all, of the interest you pay may be tax deductible.
Qualifications for Student Loan Interest Deductions
If you are a student taxpayer you may be eligible to deduct a nice chunk of your student loan interest off your annual taxes. Taxpayers responsible for paying loans for dependents may also qualify for these lucrative deductions.
- To be eligible student loans must be attached to a post-secondary, degree education and students must have been enrolled at least half-time.
- Income limitations apply: if you are filing as a single your Modified Adjusted Gross Income (MAGI) may not exceed $55,000 and $110,000 for married couples that file jointly. You may qualify for a partial deduction if your MAGI is between $55,000 and $70,000 for singles, and $110,000 and $140,000 for joint.
- Your maximum deduction may be $2,500.
- You may not use the 1040EZ form to file the student loan interest deductions.
Loan Deduction Limitations
Qualifying student loans include those taken out for educational expenses, such as tuition, room and board, textbooks, fees. Student loans taken out to cover personal expenses are excluded. Also, loans directly made to you from family or close relatives to not count, either.
**Here’s the deal: tax deductions and incentives for your educational expenses or student loan interest can be extremely useful when used properly. Ask a tax advisor to guide you when trying to strategize your deductions for student loans.
Again, a good reason to understand the details of a student loan before you even borrow is future tax benefits. By looking into the tax deductions available to you before getting a student loan, you not only save yourself a lot of grief, but you also help ensure you get the best deal possible and the most deductions possible come tax time.
Talk with your tax advisor to see just how much of the student loan tax break you may be eligible to receive.