15
Aug

Prior to 1997, student loan interest was considered personal interest, and therefore not deductible. With the idea of alleviating some of the burden of these loans, the tax law was updated to allow for a deduction for some of the interest incurred. Currently, the taxpayer can deduct up to $2,500 in student loan interest paid in a given year. Surprisingly, if your filing status is Married Filing Jointly, the deduction does not double. If the filling status is Married Filing Separately, the deduction is disallowed in total. The person whose SS# is associated with the loan is the only one allowed to take the deduction, regardless of who pays the loans. Similar to most credits and deductions there are phase outs for student loan interest too. The phase-out begins at $65K -$80K filing status single, and $130K-$160K as married filing jointly.

The student loan interest paid can be found on form 1098-E. The taxpayer might have to do some searching for these forms. If the amount is below $600, a form is not required to be mailed. The taxpayer will have to call or login to their account to track down the amounts. The student loan interest deduction is an above the line deduction, taking on line 33 of Form 1040.

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