|
Limits for Deducting Interest Paid on a Student Loan
Larry Denton
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 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 about deducting student loan interest, refer to IRS Publication #970,entitled "Tax Benefits for Education."
Additional Tax Articles
How And Where To Find Valuable Tax Information
Taxpayers have two options when filing a federal or state income tax return. Taxpayers can have their tax returns professionally prepared or they can prepare their own taxes. Whatever tax preparation option...
How to Determine Your Filing Status
Your filing status is used in determining whether you must file a return, your standard deduction, and the correct amount of tax you must pay. It may also be used to determine whether you can claim certain...
Exemptions and Your Tax Return
In general, you can deduct $3,200 for each exemption you claim in 2005. You may be able to take an additional exemption amount if you provided housing to a person displaced by Hurricane Katrina. For...
What If I Made a Mistake on My Return?
Errors may delay your refund, cause you to pay additional interest or penalties, or result in notices being sent to you. If you discover an error, you can file an amended return or claim for refund. ...
|
