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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.