Question for the Money Doctors
Question submitted on Aug 17, 2013.
QuestionWhen a graduate starts to pay back their college loan is any of the interest considered a deduction when filing their tax returns?
You are eligible to take the student loan deduction of up to $2,500 if you meet the below noted qualifications.
- Your modified adjusted gross income * is less than $75,000 ($155,000 if filing joint return).
- Your deduction will be reduced if your modified adjusted gross income is between $60,000 &$75,000 ($125,000-$155,000 if filing joint return).
- The loan was taken out solely to pay qualified education expenses
- The student must be you, your spouse, or your dependent.
- The student must have been enrolled at least half-time in a degree program.
- Your qualified education expenses must have been paid or incurred within a reasonable period of time before or after the loan is taken out using a federal post secondary education loan program.
- Your loan was for you to attend an eligible educational institution such as a college, university, vocational school,or other post secondary educational institution eligible to participate in a student aid program administered by the U.S. Department of Education.
*Modified Adjusted Gross Income is your adjusted gross income plus items such as student loan deductions, higher education deductions, IRA contribution deductions, foreign income and foreign housing deductions.
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