Student Loan Interest Deduction
A couple of weeks ago, we listed a lot of helpful information about student loans. Today we would like to share with you one of the tax benefits of a student loan interest deduction. If your modified adjusted gross income is less than $75,000 you may qualify for a student loan interest deduction. This deduction is based off the interest paid during that tax year and must be from a loan taken out solely to pay for qualified education expenses. The student loan interest deduction can be up to $2,500. This student loan interest deduction is claimed as an adjustment to your income so you don’t need to itemize your deductions on IRS Form 1040.
Additional details to qualify for this deduction can be found at: http://www.irs.gov/publications/p970/ch04.html. Another important limit to know is that you may not claim multiple benefits per tax year. This means if you’re already planning on claiming an education credit on your taxes, you cannot also take advantage of this deduction. This also means you cannot claim any portion of interest that has been claimed as a deduction under any other provision of the tax law.
Recently there have been some “Phaseout” of these deductions for those with certain filing statuses and incomes. While the IRS Website link above has more information to find out how your status and qualification may have changed, the chart below also highlights the basic groups affected by the changes.
If you have any additional questions about the flexibility of student loans or you’d like some more information about the possibility of going back to school to achieve your career, talk to an LA ORT advisor today!