You may be one of the many adult/e-learners returning to college that have student loans from previous college experiences. You may be paying a student loan taken out to pay for a dependent's college tuition and fees; you may be able to decrease your taxable income by as much as $2,500 for interest paid on those loans during the tax year.
To count towards the interest deduction, the interest paid must be for a loan obtained only for the payment of college tuition and qualified related expenses. Typically the interest deduction is applied to interest on federal student loans such as Perkins, Stafford, PLUS, and Consolidation loans.
The same income restrictions that apply to the tuition and fees deduction also apply to the student loan interest deduction.
In most cases, the student loan interest deduction may be claimed by filing either Form 1040 or Form 1040A, known respectively as the long-form 1040 and short-form 1040. If you wish to claim the deduction, you will not be able to do so using Form 1040EZ, "Income Tax Return for Single and Joint Filers With No Dependents."
To learn more about the student loan interest deduction, contact your lender or see IRS Publication 970, "Tax Benefits for Education." Click here to access the publication.
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