Five Tax Tips for Your Student Loans
- January 9, 2019
- by Barsz Gowie Amon & Fultz
Happy 2019! A new year means tax season is just around the corner and we are here to help answer all your pressing tax return questions. Check in for regular updates to the blog about how to fill out your tax forms this tax season.
Do you have student loans? Your student loan interest can be deductible, but only if you file under certain conditions.
1. Marital Filing Status
If you are married and file separately, you cannot deduct your student loan interest. This is an incentive to file together.
2. Dependent Status Is Critical
You can’t deduct student loan interest if you’re claimed as someone else’s dependent, but this may be a better strategy. Your parents can claim you on their taxes if you are in school full time, are age 24 or under and they are providing 50% or more of your support.
3. Income Threshold Limitations
If your adjusted gross income (AGI) is between $65,000 and $80,000 ($135,000 and $165,000 if married filing jointly), you’re eligible for the interest deduction. You should receive a Form 1098-E if you paid more than $600 in interest.
4. Loan Had to Be Used for Qualified Education Expenses
Qualified Education Expenses for purposes of the student loan interest deduction are the costs of attendance at an eligible educational institution, not including adjustments for certain nontaxable educational benefits. An eligible educational institution is defined the same as for purposes of the American Opportunity and lifetime learning credits. It also includes an institution conducting an internship or residency program leading to a degree or certificate from an institution of higher education, hospital, or health care facility that offers postgraduate training.
The costs of attendance generally include: tuition and fees; room and board; books, supplies, and equipment; and other necessary expenses such as transportation. The cost of room and board qualifies only if it is not more than the allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance for federal financial aid purposes. Room and board may also qualify if the student is residing in housing owned or operated by the eligible educational institution.
5. Student loan help through your job
If your employer helps pay off your student loans, it might be considered compensation and subject to payroll taxes.
Stay tuned for more tax tips as we head deeper into tax season!