Is interest paid on student loans tax deductible?

in Student Loans

sigcyril asked:

I have about $120K in student loans right now that I am paying off. I paid about $7500 in interest in 2006 on those loans. My loan provider sends me a form stating this for tax purposes. Is it tax deductible?

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4 comments

Meg W on October 3, 2009 at 2:35 pm

Absolutely. Even if you don’t itemize deductions!
theanswerman on October 4, 2009 at 6:28 pm

Yes, but as always check with a good tax person for your specific situation.
Nita on October 7, 2009 at 9:47 pm

yes it is, you should received a 1099 form with the interest you can report you take that form with yor w-2 to the person who is goint to do your taxes… If you want to do it yourself I recommend you go to the site the go to free e-file is really easy to do it yourself.
Rob on October 8, 2009 at 2:41 pm

The maximum deductible interest on a qualified student loan is $2,500 per return. If you are a taxpayer whose return status is married filing jointly, you are allowed to deduct the full $2,500 only when your modified adjusted gross income (MAGI) is $100,000 or less. If your MAGI is more than $105,000, but less than $135,000, the amount of your student loan interest deduction is gradually reduced. The instructions for Form 1040 (PDF) show you how to compute the deduction. If your MAGI is $135,000 or more, you are not able to take any deduction.

For those whose filing status is single, head of household, or qualifying widow(er), the full $2,500 deduction is allowed for MAGI levels equal to or below $50,000. For MAGI between $50,000 and $65,000, the deduction amount is gradually reduced. The Form 1040 Instructions show you how to compute the deduction. If your MAGI amount is $65,000 or more, there is no deduction.

There is no deduction if you file as married filing separately, if you are claimed as a dependent, or if the loan is from a related party or a qualified employer plan. For more information, refer to Publication 970, Tax Benefits for Education, Chapter 4; Tax Topic 505, Interest Expense; and Tax Topic 513, Educational Expenses .