Friday, April 8, 2011

Paying on Student Loans? Deduct the interest

A deduction of up to $2,500 may be allowed for amounts paid for interest on qualified student loans on line 33 of Form 1040. Only the actual amount of interest paid in the current year may be deductible. You may not claim the deduction in any year in which another taxpayer claims you as a dependent or if your filing status is Married Filing Separate.

A qualified student loan is a loan you took solely to pay qualified education expenses at an eligible education institution.

Use the Student Loan Interest Deduction Worksheet to see if the deduction amount is reduced or eliminated based on your Adjusted Gross Income.

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