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Student Loan Tax Deduction

September 10, 2011

Student Loan Tax Deduction

Student Loan Tax Deduction

Did you know that your interest on your student loans may be tax deductable? The Tax Relief Act rules are that you can deduct up to the amount of 2,500 dollars in the interest on you paid on your loan each year you are paying on it, done on your income tax return. This can be done by students paying interest on their loans, parents paying for their childrens loans and spouse payments, anyone who is is paying interest fees on their debt are eligible for student loan tax deduction (under certain qualifications, discussed below).

It is important to know that between the periods of 2010 and 2012, can can deduct up to 2,500 dollars whichever year of repayment you are in, but after 2012, you can only take part student loan tax deduction between the first 5 years or your repayment term.

Student Loan Tax Deduction Qualifications

  • You must be making under the amount of 55,000 to 70,000 dollars individually, or under 110,000 and 140,000 between you and your spouse. If you make these figures or above, you will be unable to qualify for a student loan tax deduction.
  • The student must have been enrolled in a schedule the was at least half time at your college, vocational school, training facility, etc.

Student Loan Tax Deduction Terms

  • You can use student loan tax deductions for many different parts of your schooling, some of which include, tuition, books, room and board, tranportation to and from your school as well as other general living expenses thorughout the year. This information must be proved to the IRS that you spent this money on the above expenditures.
  • If you and your spouse both have student loans you are paying on, you will need to file a joint tax return, which both can deduct up to 2,500 dollars each.

If you are interestest in utilizing student loan tax deduction you can either contact a personal tax preparer if you or you family has one, or you can contact one that is in your immediate area who will assist you in filling out the necessary information that is needed to be able to recieve tax deductions on your student loans.

Other Valuable Information

Also note that when filling out your tax return for you student loan tax deduction avoid using a 1040EZ form as this form doesn’t allow you to file for interest returns, you will want to either use a 1040 or a 1040A which both allow you to deduct on interest payments.

Like it was said above, you can do this each year after 2012 for the first 5 years of your repayment term. This can be a great way to get a lot of money back each year that can be utilized as a large payment on your loans. You should also take advantage of this 5 year timeframe if you are paying under 2,500 dollars a year on interest, and up the payments so that you do hit the 2,500 mark so that you can get more money back each year in student loan tax deduction funds.



Student Loan Interest Deduction Major Overview

August 28, 2011

Student Loan Interest Deduction

If you have came to this page looking for information on student loan interest deduction, then you are in the right spot as we will provide you with all the details needed to make yourself familiar with the subject. To give you a feel for what we will be getting into, student loan interest deduction can equate to you being able to use the money you paid on interest as a tax deduction, meaning that it can save you hundreds or thousands. For all the major details on student loan interest deduction, read on the next sections will go into deep detail about it.

student loan interest deduction

Student Loan Interest Deduction – Major Overview

The Tax Relief Act states that you are able to deduct up to 2,500 dollars in the interest that you paid on your student loans each year, meaning that if you spent over that, then you are limited to getting 2,500 dollars back, which you can turn around and drop a large payment on your student loans, getting out of debt faster, and remember, you can do this every year.. A quick note to remember is to use either a 1040A or 1040 form for this, avoid using a 1040EZ tax form as this doesn’t allow student loan interest deduction. As a way for you to get the most information, the main details will be in bulet point form:

  • If you happen to be married and both you and your spouse have student loans, then you will need to fill out a joint form for both of you to qualify for student loan interest deduction.
  • You cannot qualify for student loan interest deduction if you make 70,000 + individually or  140,000 + as a couple.
  • The three categories which make you eligible for student loan interest deduction are that you are paying for your student loan, paying for your spouses loan or paying on a person whom was dependent on you when taking out the loan
  • You also must have been enrolled in school at least in a half time basis as well as graduated or completed the education you set out to get, like colleges or vocational studies.
  • The qualified expenditures aren’t limited to just tuition costs, others that are qualied are living expenses, your textbooks, school supplies as well as your transportation going to and from school. When it comes to deduction for these categories, you must prove to the IRS where and how you spent money on them.
  • Student loan interest deduction can only be used for student loans.

Student Loan Interest Deduction – Conclusion

Now that you know the basics to student loan interest deduction, you can now apply it to your student loan situation to get big money back that you can use towards living expenses or towards paying off your debt a lot quicker than normal. For more information, the best thing to do now would be to contact either your personal tax preparer, or find one in your loacal area as they will be able to get you going, and provide you with the most up to date information on student loan interest deduction.