There is a student loan tax break. You are allowed to deduct up to $2,500 of your student loan interest from your taxable income.
Student loans are hard enough day to day. It’s still early in 2017, which means people are starting to fill out their tax forms. But there is something you should know before you mail off your 1040. There is a student loan tax break. You are allowed to deduct a portion of your student loan interest from your taxable income.
You can deduct up to $2,500 in student loan interest. The student loan interest tax deduction can be found on Form 1040, Line 33. Since it is considered an “above the line” tax deduction you don’t have to itemize your taxes in order to claim the deduction.
It is important to note that the deduction is not a credit. The student loan income tax deduction will simply reduce your taxable income by up to $2,500. This does not mean you will receive $2,500 back from your federal tax returns.
Something you need to know if you qualify for the student loan tax break. First, you have to have a qualified student loan. This means you need student loans from the federal government or a private lender. The money your parents loaned you does not count. A qualified student can either be you, your spouse, or your dependent if the loan is taken out on their behalf. Furthermore, you, or whomever the loan is taken out for, must be enrolled at least half-time at an eligible university or other educational institutions. You also need to be in a program that is working toward a degree or certificate of some kind. It should be noted, if you make too much money you will not qualify. If you’re married your modified adjusted gross income cannot exceed $160,000 or $80,000 if you’re another filing status.
The maximum monetary value you can receive from the student loan interest tax deduction is $625. Keep in mind there are many other factors that will go into what you will receive back from the government such as your income, filing status and any other deductions you might make.
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