Are you a college student or the parent of a college student who is using a student loan to pay for college? The interest on a student loan is usually lower than other forms of loans but you can qualify for a student loan interest deduction. This can be a huge help especially if you're scraping finances together for books, materials and other expenses. Here is an overview on the specifics and qualifications of a student loan interest deduction.
A student loan interest deduction allows you to deduct up to $2,500. This amount applies to the interest paid against a student loan. Even if your loan is nullified, you can deduct this amount from your income. There are some loans that are excluded from this deduction and not everyone qualifies.
To qualify, your student loan must have been solely used to pay for higher education (as defined by the rules of the deduction). It can also be a loan you took for a dependent such as a son, daughter or spouse. The student loan must be used for college or vocational school tuition and expenses including fees, supplies, books, room and board, etc. You (or your dependent) must be at least a part time student and be enrolled in a degree, certificate or other qualified education program.
This tax deduction can not be claimed in some situations. If someone else claims that student as a dependent or if the loan was made by a relative then this deduction can not be claimed. It is also not available if you are married and filing a separate return for your spouse or you are not allowed legally to clear your student loan.
There are also other things that are taken into consideration. The costs you incur must be reduced by non-taxable distributions from a Coverdell savings account or another qualified tuition program. A reduction must also be made for interest from US savings bonds that are non-taxable and other non-taxable educational assistance.
As of 2002, deductions are permitted on voluntary interest payment rather than only on required interest payments. This student loan interest deduction is taken on your federal taxes on either Form 1040 or 1040A. Consult a tax advisor or an accountant if you need help in determining eligibility or applying for the discount.
With very little work, you can receive up to $2,500 in deductions for student loan interest. That is money that can be used towards other school necessities and expenses.
A student loan interest deduction allows you to deduct up to $2,500. This amount applies to the interest paid against a student loan. Even if your loan is nullified, you can deduct this amount from your income. There are some loans that are excluded from this deduction and not everyone qualifies.
To qualify, your student loan must have been solely used to pay for higher education (as defined by the rules of the deduction). It can also be a loan you took for a dependent such as a son, daughter or spouse. The student loan must be used for college or vocational school tuition and expenses including fees, supplies, books, room and board, etc. You (or your dependent) must be at least a part time student and be enrolled in a degree, certificate or other qualified education program.
This tax deduction can not be claimed in some situations. If someone else claims that student as a dependent or if the loan was made by a relative then this deduction can not be claimed. It is also not available if you are married and filing a separate return for your spouse or you are not allowed legally to clear your student loan.
There are also other things that are taken into consideration. The costs you incur must be reduced by non-taxable distributions from a Coverdell savings account or another qualified tuition program. A reduction must also be made for interest from US savings bonds that are non-taxable and other non-taxable educational assistance.
As of 2002, deductions are permitted on voluntary interest payment rather than only on required interest payments. This student loan interest deduction is taken on your federal taxes on either Form 1040 or 1040A. Consult a tax advisor or an accountant if you need help in determining eligibility or applying for the discount.
With very little work, you can receive up to $2,500 in deductions for student loan interest. That is money that can be used towards other school necessities and expenses.
About the Author:
Daniel Atolben works most often for http://www.debtania.com , an online publication on the topic of loans to consolidate debt . On his site you might come across his articles on consolidate debt amongst a personal loan and loans to consolidate debt.
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