Can you claim your 2006 taxes that the govt took for student loans on your 2007 return as a deduction?

Question

I had defaulted student loans in 2006 so the govt took my whole refund in order to help pay off my student loans. Well my loans are no longer in default and I know there's a place for student loan interest to be taken off of your AGI but I wasn't sure if I could claim this amount or not. I know the money that I have paid off to get them out of default I can claim but I'm wondering about the money that the govt took.

And if so where could I find some info on this subject, I've looked high and low and the irs. gov website doesn't really give you a clear defition of what counts and what doesnt.

Answer 1

sorry, but you can't deduct the refund that the govt took at all. Federal refunds can't be deducted anyways, and state refunds are taxable on the federal returns if you itemized the previous year. And if they took the refund to pay the loan that you defaulted on, loans themself are not deductible, just the interest on the loans.

Answer 2

Some of your loan repayment in 2007 was made through your tax refund. You are considered to have paid those amounts. Any part of that amount that was paid that is interest can be deducted by you on your 2007 tax return, assuming your income is below the threshold for the student loan interest deduction.

You need to get a statement from the lender as to what payments were made in 2007 and how much of that was interest. You will likely get a 1098 from the lender with this information, which will include interest payments that were part of the refund.

Answer 3

Assuming that your 2006 Tax Refund was seized in 2007, then technically speaking it should be the same as if you had sent that amount of money directly to your student loan lender. Next January or February you should receive a 1098-E which should show how much interest was paid on your student loan. Assuming you otherwise qualify, you should be able to deduct the interest paid by you (or at least on your behalf) from your 2007 income taxes.

The big question you have to answer is what happened to the money taken from your tax refund. If you're lender has online account management, you should be able to see this payment reflected.

Additionally, student loan interest, if deductible, is taken out before AGI is calculated.

Also, I need to clarify that the 5-year limit was removed from the tax code, and the student loan interest deduction is based on interest paid and not interest charged. Any other fees related to your default, may not qualify as interest.

Answer 4

"I know the money that I have paid off to get them out of default I can claim "...If you are saying you can deduct the principal amount you paid to get your loan out of default, then that is inaccurate. ONLY interest is deductible, and that is deductible only for the first 5 years.

If you had interest charged in 2006 you would have had to file that on your 2006 taxes. You can not claim interest for 2006 on your 2007 taxes. In order to claim the interest(if any) you will have to file an amended return for 2006.

For 2007 at the end of the year the company administering your loan will send you a statement as to the interest charged/paid in 2007. This is the only amount you can claim on your 2007 taxes. If you want to have an idea of that amount you should be able to call them and they can give you a year to date statement.

Answer 5

No you can't claim the amount - it was taken for overdue payments. Part of it was probably applied to interest, but unless you got some paperwork from the lender showing it as interest, you can't claim it.

I'm not sure where you got the info that you can deduct the money you paid them to get out of default. If some of it was interest you could probably deduct that, but not anything that went toward the principal.

Answer 6

The interest you paid in 2006 can only be deducted on your 2006 tax return. Didn't you do that? I would imagine the lender would send you a 1099-int statement at the end of each year telling you how much interest you paid

Answer 7

No, you're somebody taxpayer and could be on the money foundation approach of accounting. you could in basic terms deduct those products which you certainly apid in 2006 on your 2006 tax return

Answer 8

Do deduction for seized refunds.

The interest you pay going forward is deductible. It is possible that some of the amount seized was to pay back interest. That amount will be reported to you on a 1098 and is deductible.

Answer 9

you can only deduct additional interest.
the repayment of the loan is exactly that - a repayment of money that was never yours. Therefore you cant deduct the repayment regardless of whether it came from your tax refund.