Deducting Student-Loan Interest in header of articles
Deducting Student-Loan Interest
You might be paying back loans you took to finance higher education. If so, you might qualify to deduct up to $2,500 of interest per return per year. You can claim the student-loan interest deduction as an adjustment to income. You don't need to itemize deductions to claim it.
Student-loan interest is interest you paid during the year on a qualified student loan. A qualified student loan is a loan you took out only to pay qualified education expenses that were:
For you, your spouse, or a person who was your dependent when you took out the loan
Paid or incurred within a reasonable period of time before or after you took out the loan
For education provided during an academic period for an eligible student
Loans from these sources aren't considered qualified student loans:
Qualified employer plan
Qualified education expenses are the total costs to attend an eligible school. This includes graduate school. The costs include:
Tuition and fees
Room and board
Books, supplies, and equipment
Other necessary expenses, like transportation
You can usually claim this deduction if you meet all these requirements:
Your filing status is any status except married filing separately.
No one else is claiming you as a dependent.
You're legally obligated to pay interest on a qualified student loan.
You paid interest on a qualified student loan.
If you're married filing jointly:
You can deduct the full $2,500 if your modified adjusted gross income (AGI) is $125,000 or less.
Your deduction is gradually reduced if your modified AGI is more than $125,000 but less than $155,000.
You can't claim a deduction if your modified AGI is $155,000 or more.
If you're filing single, head of household, or qualifying widow(er):
You can claim the full $2,500 deduction if your modified AGI is $60,000 or less.
Your deduction is gradually reduced if your modified AGI is between $60,000 and $75,000.
You can't claim a deduction if your modified AGI is $75,000 or more.
To learn more, see Chapter 4 of Publication 970: Tax Benefits for Higher Education at www.irs.gov.