Is student loan interest tax deductible?

According to the Internal Revenue Service (IRS), you can deduct interest you paid on a qualified student loan if you meet all requirements, listed below.

• You paid interest on a qualified student loan in tax year 2010
• You are legally obligated to pay interest on a qualified student loan
• Your filing status is not married filing separately
• Your modified adjusted gross income is less than a specified amount which is set annually, and
• You and your spouse, if filing jointly, cannot be claimed as dependents on someone else’s return.

You cannot deduct interest if you do not meet all of the above requirements. Additionally, you cannot deduct more than $2,500.

A qualified student loan is a loan you take out to pay for qualified higher education expenses, which must meet three conditions.

• The expenses were for you, your spouse or a person who was your dependent when the loan originated.
• You paid or incurred the expenses within a reasonable period of time before or after you took out the loan.
• The expenses were for education furnished during an academic period when the recipient was an eligible student.

In the adjustments to income section of the 1040 or 1040A form, student loan interest is a tax deduction. You can deduct the interest on the loan even if you do not itemize the loan.

Your university and loan provider are not able to tell you if you qualify for a loan interest tax deduction. For more information, talk with a tax professional, or contact the IRS.