Mapping Your Future: A tax benefit that is in your interest

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A tax benefit that is in your interest

By Catherine Mueller

February 04, 2020

The sting of paying interest on student loans can be eased somewhat if you are able to claim on deduction on your income tax return.

Student loan borrowers can deduct the lesser of $2,500 or the amount of interest actually paid in the tax year - if certain requirement are met. 

If you paid more than $600 in student loan interest in 2019, then you likely received a 1098-E from your student loan servicer. You may be able to  claim a deduction for that amount if you meet certain requirements:

  • You paid interest on a qualified student loan in tax year 2019
  • You're legally obligated to pay interest on a qualified student loan
  • Your filing status isn't married filing separately
  • Your modified adjusted gross income (MAGI) is less than a specified amount which is set annually
  • You or your spouse, if filing jointly, can't be claimed as dependents on someone else's return

The deduction is gradually reduced and eventually eliminated by phaseout when the borrower's modified adjusted gross income (MAGI) amount reaches the annual limit of their filing status.

If you aren't sure if you can claim the deduction, the IRS has an online tool to help you if you are eligible.

For more information about the student loan interest deduction and how your MAGI affects the deduction amount, refer to Publication 970 (PDF) and Can I Claim a Deduction for Student Loan Interest?

Mapping Your Future provides this information as a service. Contact a qualified tax advisor for guidance on your specific situation.