FREE CONSULTATION

October 23, 2024

If you pay interest on a qualified student loan, you may just be able to take a deduction up to $2,500 to lower your taxable income. The question is are you eligible to claim a student interest loan deduction? 

 
Eligibility and Qualifications 

The great thing about this benefit is that it is an adjustment to your taxable income which means that you can claim this deduction even if you don’t itemize your deduction on Schedule A (1040). But there are certain qualifications and requirements to claim the student loan interest deduction. 

Qualified Loan. The loan must be taken out for attending an eligible educational institution such as any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U.S. Department of Education. The loan may be used to pay for the following: 

  • Tuition and fees. 
  • Room and board. 
  • Books, supplies, and equipment. 
  • Other necessary expenses (such as transportation) 

Student Eligibility. The student who took the loan must be: 

  • you, your spouse, or your dependent (a qualifying child or relative), and 
  • enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential at an eligible educational institution. The half-time standard is determined by each eligible educational institution. 

Filing Status. Married taxpayers filing separately cannot claim this deduction. 

Limit on MAGI. This deduction can only be availed by taxpayers who pay the student loans with MAGI (modified adjusted gross income) less than $185,000 for joint filers or $90,000 for single, head of household, or qualifying surviving spouse.  

Figuring and Claiming the Deduction 

The student loan interest has a maximum limit of $2,500. Your deduction would be the lesser amount between $2,500 or your actual interest paid during the tax year. However, the deduction limit may gradually decrease or phase out depending on your MAGI level. 

If you paid at least $600 interest for your student loans, then the loan institution would send you a Form 1098-E (Student Loan Interest Statement) to inform you of your paid interest. 

To claim the deduction, you must enter the allowed deduction on Schedule 1 (1040), line 21. 

 Want to learn more? 

You may want to consult and work with 1099 Accountant – We offer online bookkeeping, online advisory services and online tax and accounting services. We offer reasonable rates. We only work with independent contractors, freelancers, and one-person business. We work with locum tenens from California to New York City and everywhere in between. Yes, even Hawaii! 

Contact us toll-free (855)529-1099 or make an appointment for a free consultation. Contact Us

TAKE ONE STEP FORWARD

Sign up with your email address to receive the latest
deals and tax updates.