Can you deduct student loan interest from taxes?

Question

Are you allowed to deduct student loan interest from your taxes each year when you file?

Answer 1

For 2006, you could have deducted up to $2,500 of student loan interest you paid. This lowers your taxable income dollar for dollar. It lowers your taxes by whatever tax bracket you are in. For example, if you are in the 25% tax bracket and paid $1,000 in interest, you would save $250 in taxes.

There are caveots. You can't file married filing separately. If you are married, your income must be less than $135,000 (phase out between $105,000 and $135,000). If you are not married, it must be less than $65,000 (phase out between $50,000 and $65,000). Phase out means if you are below the smaller number, you get to deduct 100% of the interest, but if you are between the numbers, only a certain percentage of interest is deducted.

So, if you are single and had $3,000 of student loan interest you paid in 2006, and your income was $55,000, you can deduct $1,667 of interest. First, the $3,000 is limited to $2,500. Second, the $2,500 is limited by 33% because you fall into the phase-out range. This $1,667 goes on line 33 of the front of your 1040 and lowers your income. If you are in the 25% tax bracket, you'll save $417 on taxes.

Answer 2

You don't deduct the interest from your TAXES, but you can in most circumstances use the interest as an adjustment to your INCOME. If you owe tax, this would lower your tax bill by an amount equal to the interest times your tax bracket. So if you had $1000 interest and are in a 15% bracket, it would lower your taxes by $150.

Answer 3

sure you will desire to amend previous tax returns. in case you will do the amended returns your self, then that's a controversy of what your value it sluggish at, to whether that's properly worth it sluggish. How lots you're able to get lower back relies upon on what tax bracket you're in and whether you had any tax criminal accountability. in case you probably did not have any tax criminal accountability, then you definitely at the instant are not likely to alter something along with your scholar very own loan interest deduction.

Answer 4

Yes, up to 2000 or 2500 bucks. We just put in all our interest (which is like 6500 and they just accept the max of 2000-- I am hoping it goes up next year.

Answer 5

Absolutely yes - in fact, there is a specific box on tax forms for it!