Can you deduct student loan interest paid for someone else?
All of the following must be true of the loan and your tax filing status for the interest to be considered deductible: No one else can claim you—or your spouse, if you’re married—as a dependent on their tax return. You are legally obligated to pay the interest on the student loan.
Who may not claim a student loan interest deduction?
People at higher incomes may not be able to claim the student loan interest deduction, or their deduction may be reduced. As of 2020, these income rules applied: Single tax filers with a modified adjusted gross income, or MAGI, of $85,000 or more could not claim the deduction.
Can you deduct student loan interest if married filing jointly?
If you’re married filing jointly: You can deduct the full $2,500 if your modified adjusted gross income (AGI) is $140,000 or less. Your student loan deduction is gradually reduced if your modified AGI is more than $140,000 but less than $170,000.
When can you no longer deduct student loan interest?
You may deduct the lesser of $2,500 or the amount of interest you actually paid during the year. The deduction is gradually reduced and eventually eliminated by phaseout when your modified adjusted gross income (MAGI) amount reaches the annual limit for your filing status.
Do you have to itemize to claim student loan interest?
You don’t need to itemize to take a student loan interest deduction. The student loan interest deduction is an above-the-line tax deduction, which means the deduction directly reduces your adjusted gross income. You input the amount of deductible interest, and it reduces your adjusted gross income.
Can you deduct interest on a student loan if you are a cosigner?
If you are a co-signer and YOU are making the payments then you can take the deduction. It has nothing to do with claiming your child as a dependent. Only the person whose name is on the student loan and who is legally obligated to pay the loan can deduct the student loan interest.
What happens to the student loan interest deduction?
There is a phaseout for the Student loan interest deduction, which means the amount you can deduct gets reduced when your modified adjusted gross income hits certain income levels and is even eliminated at certain income levels –
Can you deduct interest on Parent PLUS loans?
If you took out Parent PLUS Loans, parent private student loans, or co-signed student loans with your child and are legally responsible for their repayment, you can deduct the interest you paid on the debt. But if you just made payments to give your child some relief — and are not legally obligated to make payments — you cannot claim the deduction.
What kind of loans are not eligible for the interest deduction?
Certain types of loans do not qualify for the Student Loan Interest Deduction. These would include a loan taken from a qualified plan like a 401K or 403b and loans made between related parties.
