Student Loan Interest Deduction
You might be paying back loans you took to finance higher education. If so, you could 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:
- Related person
- 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 $130,000 or less.
- Your deduction is gradually reduced if your modified AGI is more than $125,000 but less than $160,000.
- You can’t claim a deduction if your modified AGI is $160,000 or more.
If you’re filing as single, head of household, or qualifying widow(er):
- You can claim the full $2,500 deduction if your modified AGI is $65,000 or less.
- Your deduction is gradually reduced if your modified AGI is between $65,000 and $80,000.
- You can’t claim a deduction if your modified AGI is $80,000 or more.
To learn more, see Chapter 4 of Publication 970: Tax Benefits for Higher Education at www.irs.gov.
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