The student loan interest is a federal income tax deduction that allows you to deduct up to $2,500 from your taxes.
Maximum Of $2,500 Loan Deduction For Students Available Now – Here’s How to Qualify (PHOTO: Fox 59)
How Much Is The Maximum Student Loan Interest Deduction?
The student loan interest deduction is a tax break for college students who took on debt to pay for their school. Moreover, the maximum student loan interest deduction is $2,500 per year, whether you’re single or married and filing jointly. Plus, the student loan interest is deductible if your modified adjusted gross income, or MAGI, is less than $70,000 ($145,000 if joint filers). If your MAGI was between $70,000 and $85,000 ($175,000 if joint filers), you can deduct less than the maximum of $2,500. You can’t claim the deduction if your status is married and filing separately, regardless of your income.
Who Are Can Qualify For The Student Loan?
Student loans must be used to pay for the education costs within a “reasonable” period after you took out the loan. You can include interest paid on refinanced or consolidated student loans, but you can’t count loans that were taken from a related person or an employer plan. Additionally, here is a breakdown of what qualifies for a student loan interest deduction:
- Qualified education expenses: If the loan was for tuition, room and board, books, or other related expenses you could deduct them.
- The loan was for a dependent: If you took out a loan in your name for someone else like a child or another dependent, you can take the student loan interest deduction.
- Making interest payments while in school: If you’re an overachiever who is making payments while currently still enrolled in school you could be eligible for this deduction.
- You were obligated to repay the loan: If your wages are being garnished or you’re otherwise legally responsible for the loan, you can still deduct any interest you’ve paid off.
Here’s How To Claim
If you paid more than $600 in student loan interest during any year, you’ll receive a Form 1098-E documenting the amount you paid. If you qualify for the deduction, you can claim it even if you don’t itemize your deductions and claim the standard tax deduction. And, you can file your taxes with Form 1040.
READ ALSO:
Things You Need To Know About The Impact Of Student Loans On Your Taxes
Get Up To $5,250 Through Tuition Fee Assistance Programs, Here’s What To Do
