I have $23,000 worth of Student Loan Debt left. It's been a tax deduction for me while paying it off but I have so many years left on it and now the rate is worse than if I went and got a loan elsewhere. I'm wondering, would it make sense tax wise to pay off the student loan with other money or does the tax deduction somehow cancel out the interest for the loan and make it worth it to keep it?
2006-07-16 06:44:37 · 4 answers · asked by Peter R 2 in Business & Finance ➔ Personal Finance
Where do people get the idea that a "tax deduction" is a benefit, if a debt can be paid in full.
Does no one understand that a "tax deduction is not a deduction 'from' taxes"?
The "deduction" reduces ones adjusted income, which is then taxed at a percentage, according to the income.
The "savings" is just a percent of the amount "deducted" from income.
Why would one pay out $100.00 in interest, and save a small percentage of $100.00? If ones income is taxed at 15%, one will save $15.00 of the $100.00
If one does not intend to fleece the taxpayer and actually pay off the loan, do it. Do the math.
2006-07-16 07:01:47 · answer #1 · answered by ed 7 · 0⤊ 0⤋
Estimate your savings on taxes, add the interest that you can earn on your $23,000 (consider risks and keep in mind you have to pay taxes on that as well), subtract your loan interest and make your decision.
2006-07-16 07:22:41 · answer #2 · answered by baku052 1 · 0⤊ 0⤋
These articles might help you:
How to Hire a Debt Counselor?
http://www.askaquery.com/Answers/qn1584.html
What is Debt Relief?
http://www.askaquery.com/Answers/qn1583.html
Debt Management and Building Wealth
http://www.askaquery.com/Answers/qn1581
How to lower your debts?
http://www.askaquery.com/Answers/qn1576.html
How to reduce debt : How to lower your expenses? http://www.askaquery.com/Answers/qn1577.html
2006-07-19 23:02:34 · answer #3 · answered by jenny r 2 · 0⤊ 0⤋
There is some useful advice here.
2006-07-16 10:52:18 · answer #4 · answered by Anonymous · 0⤊ 0⤋