Taxes and Your Student Loan Interest
Student loans can be a financial burden at a time in your life when money is already tight. The number of individuals who must take out student loans to pay for higher education has dramatically increased over the last few decades. During tax season, many wonder if there is any sort of tax relief to help offset these monthly payments. Fortunately, in many cases, your student loan interest is a key piece of tax information that can help you save when April rolls around.
Here is a basic overview of the details about deducting student loan interest:
- If you paid interest on a qualified student loan, you should be able to deduct that interest on your annual tax return. A qualified student loan is one that was taken out for the sole purpose of paying for higher education. It is important to note that you can only deduct interest paid in that same tax year.
- You can deduct up to $2500 of interest or the amount that you paid in interest —whichever is less.
- You are not required to itemize your deductions to take advantage of this deduction. The IRS realizes that many claiming this deduction will be young taxpayers just out of college who have no other need to itemize.
- Your filing status cannot be married filing separately to take advantage of this deduction.
- You also cannot be claimed as a dependent on anyone else’s tax return to deduct student loan interest. This applies to your spouse as well if you are married filing jointly.
- You are eligible to deduct student loan interest if you make less than $60,000 (filing as a single). As your income increases, the deduction potential phases out. Once you reach an income of $75,000/year, you are no longer eligible for this deduction. These amounts are doubled if married filing jointly.
- If you pay more than $600 in a given year on student loan interest, you should receive a 1098-E form, which will include the total amount you are on record to have paid. This form should be kept with your tax documentation for the year in case of audit.
Success Tax Relief: Strong Help With Potential Deductions for All Taxpayers
Deductions can be complicated and the rules for who can deduct what can seem confusing or unclear. If you have questions about potential deductions (or credits) that you might qualify for on your annual tax return, give the tax team at Success Tax Relief a call at 1-877-825-1179 or contact us here.
Our trained professionals can review your tax documents and let you know exactly what you should and should not deduct on your taxes. Often, we can suggest new ideas for deductions and/or credits that you may not be aware of.
Our team stays current on all new tax law, so you can be confident that your return will be accurate and error free. Let Success Tax Relief help you navigate this process in the coming year! Don’t be afraid of deductions any longer!