If you’re in the process of repaying student loans, trust that we feel your pain. They’re expensive, they’re tiresome, and they’re another bill in your pile of many.
Oftentimes, student loan debt is a heavy burden to bear. But, did you know that if you make less than $80,000 a year ($165,000 if filing jointly), you may qualify for a deduction on the interest you’ve paid toward student loans?
If you’re in the process of paying back student loans on a degree, certificate, or educational credential which you’ve received during your time taking credits at least part-time, you may qualify for this special tax deduction.
Again, not the entirety of your student loan repayment qualifies for a deduction. Rather, the portion of your payment that covers interest on your loans, if it is above $600, qualifies. This deduction can reduce your taxable income by up to $2,500.
Anyone that has paid more than $600 in interest in 2018 should receive a Form 1098-E (student loan interest tax form) from each of their lenders. If you think you have paid over $600 to interest on your loans and have not received a 1098-E by the end of January, contact your lender.
In order to claim this deduction, you must be legally obligated to pay the loan. If a parent claims you as a dependent and you both are obligated to pay back the loan, the deduction is allowable to whomever actually makes the payments monthly. Consult your parents if you are unsure about whether or not they claim you on their taxes.
If you are unsure whether or not you qualify for this student loan tax deduction overall, the IRS has a helpful tool for you: Click here, take the survey, and see if you qualify.