Question: Can I deduct student loan expenses?
Answer: Yes, you may be eligible to deduct student loan expenses.
If you’re in the process of paying back your student loans, you may be eligible to claim the student loan interest deduction, also known as the student loan deduction. The IRS allows you to deduct up to $2,500 of interest paid per year, but the deduction gets phased out once you exceed income thresholds.
- If you file as “Single” and your adjusted gross income for the year is less than $80,000, you would be eligible to claim a deduction up to the full $2,500.
- If you file as “Married Filing Jointly”, your adjusted gross income cannot exceed $160,000 for the year. You and your spouse together would be able to claim a deduction up to the full $2,500.
If you forgot to include the student loan interest deduction on any previously filed tax returns, you can still go back and file an amendment. By filing Form 1040X, you can potentially decrease your total taxable income by as much as $2,500 and end up with a refund. It should be noted that you have 3 years from the date you filed the original tax return to go back and file an amendment. Once the amendment has been filed, the IRS takes approximately 4-12 weeks to process the amended tax return.
We hope this helps shed some clarity on the student loan deduction to save you on your taxes.