Tax Breaks for Student Loan Interest
If you are repaying
student loans,
the interest that you pay can be subtracted from your taxable income. This deduction
will reduce the amount of money you pay on taxes. You even get more money back in
your tax return – to be used on books and supplies for the following year, of course.
The maximum amount of money you can claim in student loan interest deductions is
$2,500. That might result in as much as a $500 reduction in your tax bill, depending
on your federal tax bracket! The exact amount of your deduction depends on your
income and amount of qualified expenses. Qualified expenses include tuition and
fees, room and board, books and supplies, and transportation.
Student Loan Interest Tax Deduction
Answer the two questions below to learn if you are eligible for the student loan
interest tax deduction. If you answer "yes" to both, you will likely qualify for
a student loan deduction.
- Are you paying interest on a loan that has been solely used to pay for education
expenses?
- Is your income, or your parents' income if you are a dependent, less than $70,000
if filing singly or $140,000 if filing jointly?
Use the information on the 1098-T statement sent by your college to help you determine
if you can claim a deduction. Colleges are required to send you your 1098-T statement
by January 31.