Deducting Student Loan Interest on your Taxes

does anyone know what the maximum income is if there is one? I tried to search online and I cant find it.

Im trying to figure out if its worth paying down my student loan faster or saving the money...

TIA!!

Message edited 9/13/2007 5:51:42 PM.

Re: Deducting Studen Loan Interest on your Taxes

i am an accountant and i deduct it.

the max is $65000 if single, qualifying widower or head of household.

the max is $135000 if married filing joint.

i don't think you get the credit if married filing separate.

the credit is less if income is between 50 and 65 for the $65000 dollar income level, and between 100 and 135, the credit lowers.

does that make sense?

Re: Deducting Studen Loan Interest on your Taxes

http://taxes.about.com/od/deductionscredits/qt/studentloanint.htm

Student Loan Interest
By William Perez, About.com

More About:adjustments to incomestudent loans
Interest paid on a student loan may be tax deductible.

Reporting Student Loan Interest
Your lender will send you a Form 1098-E. The amount of interest you paid on your student loans for the year will be reported on Form 1098-E, box 1.
The maximum amount of student loan interest you can claim is $2,500 per year.


Where to Claim
Report your student loan interest paid on Form 1040 Line 33 or on Form 1040A Line 18.
Limits
The maximum amount of student loan interst you can claim as a tax deduction is limited to $2,500.
The deduction is also limited by your total income. The phaseouts for the deduction are described in IRS Publication 970. Tax software will calculate the deductible portion of your student loan interest, or you can use the worksheet in Publication 970.


From the IRS
"Generally, personal interest you pay, other than certain mortgage interest, is not deductible on your tax return. However, if your modified adjusted gross income (MAGI) is less than $65,000 ($135,000 if filing a joint return) there is a special deduction allowed for paying interest on a student loan (also known as an education loan) used for higher education. For most taxpayers, MAGI is the adjusted gross income as figured on their federal income tax return before subtracting any deduction for student loan interest. This deduction can reduce the amount of your income subject to tax by up to $2,500 in 2005."
Source: IRS Publication 970, Tax Benefits for Education, Chapter 4, Student Loan Interst Deduction.
Additional Information:
Student Loan Interest Deduction (IRS Tax Topic 456)
Tax Benefits for Education (IRS Publication 970)

Re: Deducting Studen Loan Interest on your Taxes

1. for 2006 you could not deduct more than $2,500 of SLI

2. If your AGI is over $___ and your filing status is ___ then you cannot take a deduction:

$65,000 - single, head of household
$135,000 - married filing joint

Re: Deducting Studen Loan Interest on your Taxes

thanks everyone!! i didnt realize that the income limit for married people was that low (not that $135K is low, its good $$, but come on now ive got lots of student loans )

Re: Deducting Studen Loan Interest on your Taxes

Posted by Meaghan729

thanks everyone!! i didnt realize that the income limit for married people was that low (not that $135K is low, its good $$, but come on now ive got lots of student loans )