It’s tax time again, and if you paid interest on a student loan in 2009 you may be eligible to deduct up to $2,500 of the interest you paid, whether the loan was for your own education, your spouse’s, or that of a child or anyone else who was your dependent at the time the education was undertaken.
All student loan interest payments made in 2003 and later years are eligible for the deduction. The 60-month loan limitation in effect prior to 2002 no longer applies. You do not need to fill out any special forms to claim the student loan interest deduction, and you don’t need to itemize your deductions to take advantage of it. The deductible amount is simply written on Line 33 of Form 1040, or Line 18 of Form 1040A, and subtracted from your income.
Be careful, however, because not all student loans qualify for the deduction. Beyond the dollar amount of the interest and the AGI restrictions, the tax break for student loan interest also places some limits on the types of college loan, the expenses that the loan had to be used for, and the type of education the student was pursuing.
The college loan must also have been taken out to pay qualified higher education expenses, which include the costs of tuition, fees, room and board, books, equipment, and other necessary expenses such as transportation. Qualified educational institutions for this purpose include virtually any accredited post-secondary institution. To be eligible the student must have been enrolled in a degree, certificate, or similar program and must have been carrying at least one-half the normal full-time load.
In lieu of taking one of the education credits, you may be eligible to take a deduction for the qualified tuition and related expenses, including course materials. The maximum deduction is $4,000. To claim a deduction, you must file Form 8917 with your Form 1040 or Form 1040A.
An important feature of the tuition and fees deduction is that it isn’t an itemized deduction. Rather, you can deduct it even if you don’t itemize. More importantly, the deduction serves as an adjustment to your income and reduces your adjusted gross income (AGI). This may be helpful in minimizing other tax obligations.
Hopefully these tips will help you take advantage at tax time and get something positive out of your student loans (besides an education).
How To Deduct Your Student Loan Interest
Posted by College Spot in College Finance
It’s tax time again, and if you paid interest on a student loan in 2009 you may be eligible to deduct up to $2,500 of the interest you paid, whether the loan was for your own education, your spouse’s, or that of a child or anyone else who was your dependent at the time the education was undertaken.
All student loan interest payments made in 2003 and later years are eligible for the deduction. The 60-month loan limitation in effect prior to 2002 no longer applies. You do not need to fill out any special forms to claim the student loan interest deduction, and you don’t need to itemize your deductions to take advantage of it. The deductible amount is simply written on Line 33 of Form 1040, or Line 18 of Form 1040A, and subtracted from your income.
Be careful, however, because not all student loans qualify for the deduction. Beyond the dollar amount of the interest and the AGI restrictions, the tax break for student loan interest also places some limits on the types of college loan, the expenses that the loan had to be used for, and the type of education the student was pursuing.
The college loan must also have been taken out to pay qualified higher education expenses, which include the costs of tuition, fees, room and board, books, equipment, and other necessary expenses such as transportation. Qualified educational institutions for this purpose include virtually any accredited post-secondary institution. To be eligible the student must have been enrolled in a degree, certificate, or similar program and must have been carrying at least one-half the normal full-time load.
In lieu of taking one of the education credits, you may be eligible to take a deduction for the qualified tuition and related expenses, including course materials. The maximum deduction is $4,000. To claim a deduction, you must file Form 8917 with your Form 1040 or Form 1040A.
An important feature of the tuition and fees deduction is that it isn’t an itemized deduction. Rather, you can deduct it even if you don’t itemize. More importantly, the deduction serves as an adjustment to your income and reduces your adjusted gross income (AGI). This may be helpful in minimizing other tax obligations.
Hopefully these tips will help you take advantage at tax time and get something positive out of your student loans (besides an education).