I have a Ford Federal Direct Loan. The 1098-E stated $1,162 collected. I calculated that I actually paid $692.30 in interest(I needed a forbearance for part of the year.) Any help would be appreciated? It is all rather vague at the IRS website....hmmm imagine that!
2007-03-27 03:33:18 · 4 answers · asked by forest_heritage 1 in Business & Finance ➔ Taxes ➔ United States
Student loan interest paid is given as an adjustment to income on line 33 of Federal Form 1040.The most you can take as an adjustment to income is $2,500 and there are limitations. If your AGI is over $65,000 if you are single, head of household or qualifying widow(er) then you can't take the deduction. If you are married filing jointly, you can't take the deduction if your AGI is over $135,000. (These figures are for 2006.)
As for the amount you should use on your return - the amount on the 1098-E is the amount reported to the IRS, so if you show that number on your 2005 return you will be fine. However, If you feel the loan company has miscalculated that figure you will need to contact them to make the correction. If they find that the amount shown on the original 1098-E is incorrect, they will issue you (and the IRS) a corrected 1098-E showing the corrected student loan interest paid in 2006. once they do that, you will have to report the amount shown on the corrected Form 1098-E (even if its less). Otherwise you will receive notice from the IRS stating that numbers reported to them by the loan company do not match up with the numbers provided on your return. If that happens and you wind up owing more tax, you may also be assessed interest and penalty charges.
Something else to keep in mind - You may be calculating the interest incorrectly. You can ask your lender for a loan amortization table, which will show you the amount of interest and principal applied with each payment. A part of the payment goes towards the interest cost and the remainder goes towards the principal. These amounts are usually not equal, and when you first start to repay a loan a larger portion of your payments will go towards interest rather than principal. This could be why you are thinking you paid less than you actually did.
In any case, I would suggest you give the loan company a call. Their customer service department can help you better understand how your payments are applied to your loan.
2007-03-28 17:26:10 · answer #1 · answered by TaxGirlie23 1 · 0⤊ 0⤋
Yes, student loan interest is deductible in most cases. You will have to file a Form 1040, not 1040EZ to claim it. It is an adjustment to income. You can file online for free at www.taxact.com. They will try and sell you a $9.95 upgrade, but you can do it for free and the site is easy to use. I would go with the 1098E figure.
2007-03-27 03:40:33 · answer #2 · answered by exirsman 5 · 0⤊ 0⤋
Go with the 1098E figure they sent to you. If you really think it is wrong, contact your lender to discuss with them and have them send you a revised form if they need to correct.
The student loan interest is a deduction from income, just below the income section on your federal form 1040.
Good luck!!
2007-03-27 07:08:10 · answer #3 · answered by Just Me 6 · 0⤊ 0⤋
Use the amount on the 1098. It is correct (there are other considerations). Trust me, I do it every year.
2007-03-27 03:38:26 · answer #4 · answered by searching_please 6 · 0⤊ 0⤋