Am I eligible to claim a Student Loan Interest Deduction?

Modified on Tue, 31 Jan 2023 at 09:39 PM

Similar to a mortgage, the interest paid on a qualified student loan is deductible up to the actual amount paid or $2,500, whichever is less. This applies to both federal and private student loans as long as the funds borrowed were used to pay for eligible higher education expenses for yourself, your spouse, or a dependent enrolled at least fifty percent of the time at a qualified institution. This also includes any interest from required payments or those that were made voluntarily (such as prepaid interest).

Who Can Take This Deduction?

Filers who meet all of the following may apply for this deduction:

  • You paid interest on a qualified student loan in the tax year 2022.
  • You're legally obligated to pay interest on a qualified student loan.
  • Your filing status isn't married filing separately.
  • Neither you nor your spouse, if filing jointly, can be claimed as dependents on someone else's return.

Additionally, your MAGI (modified adjusted gross income) must be as follows:

  • If it's below $70,000 for single filers or $140,000 for joint filers, then you may take the full deduction.
  • If it's between $70,000 and $85,000 for single filers or $140,000 and $170,000 for joint filers, then you may take a reduced deduction.
  • If it's more than $85,000 for single filers or $170,000 for joint filers, then you may not take the deduction.

How Will I Know How Much Interest I've Paid?

Anyone that paid more than $600 in student loan interest should receive a Form 1098-E from their loan servicer. If you didn’t receive one, contact your provider to find out how much interest was paid for the year.

Do I Need to Itemize My Deductions?

No, you do not need to itemize. This claim will just be an income adjustment on Schedule 1 of Form 1040.

For more information, please refer to IRS Topic No. 456 Student Loan Interest Deduction.

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