Are you a student or recent graduate with student loans? If so, you might be able to save some money on your taxes by claiming the student loan interest deduction. This deduction allows you to deduct up to $2,500 or the amount of interest you actually paid on your qualified student loans, whichever is less.
To qualify for this deduction, you must meet the following criteria:
- You must file taxes under any filing status except married filing separately.
- You and your spouse, if filing jointly, cannot be claimed as dependents on someone else’s return.
- For tax year 2023, your income must be under $75,000 if you are filing as Single, and under $155,000 if you are Married Filing Jointly. The deduction phases out between $75,000 and $90,000 for Single filers, and between $155,000 and $185,000 for Married Filing Jointly. For tax year 2024, these income limits increase to $80,000 through $95,000 for Single filers, and $165,000 through $195,000 for Married Filing Jointly.
The great thing about the student loan interest deduction is that you don’t need to itemize your deductions to claim it. It’s an above-the-line deduction, or an adjustment to income, which means you can claim it without itemizing if you meet the income requirements.
If you paid $600 or more in student loan interest to a single lender during the year, you should receive a 1098-E form showing your interest payments. This form will help you prepare your federal tax return.
Remember, every dollar counts when it comes to tax savings. So, if you’re eligible for the student loan interest deduction, make sure to take advantage of it. Your wallet will thank you!
Disclaimer: The information provided above is not meant to be legal or tax advise. You should consult your CPA and attorney to determine the best course of action for your situation.
Mitzi E. Sullivan, CPA is a cloud based professional services provider
specializing in cloud accounting.