Don't forget about the student loan interest deduction this year. The 1098-E form lays out how much interest you paid.
If you haven't gotten your 1098-E form yet, you should check with your student loan servicer. They are required to either mail you a copy or deliver one electronically. Individuals that opted for paperless billing may need to log into their loan accounts to see if the form is uploaded online.
Those with multiple servicers on different loans will get separate forms from each institution.
Not sure who your servicer is? The Department of Education advises you to call the Federal Student Aid Information Center at 1-800-433-3243 or visit their website at www.nslds.ed.gov.
If you do have your form, you may be wondering how much interest you can deduct.
- The maximum deduction is $2,500. You can typically deduct the lesser of $2,500 or the amount you paid.
- The deduction is an adjustment to your income. You do not need to itemize it on Schedule A of Form 1040.
- Not everybody will qualify for the deduction. Your modified adjusted gross income must be below a certain amount. You also cannot deduct the interest if you were a dependent on someone else's tax return. You must be the individual who is legally obligated to pay interest on the loan. This means that your parents cannot deduct your student loan interest even if they footed the bill. You are the one who is legally obligated under the loan, not them.
For more information about your 1098-E form or for a more detailed explanation of student loan interest deductions visit the IRS website. You may also want to consult a tax attorney or preparer who can better advise you of your tax situation.
- Student Loan Interest: Deduct $2,500 Off Your Taxes (CBS)
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- 2011 1099 Forms, Plus New Form 1099-K, Due This Month (FindLaw's Free Enterprise)
- Be Tax Savvy! Allowable Tax Deductions for Interest (FindLaw's Law & Daily Life)