The interest you pay on your student loans can help reduce your annual tax liability. The federal government allows you to deduct up to $2,500 annually of the interest you pay on any student loan debt that your family accumulated to cover college expenses for you, your spouse, or a dependent. The amount you are actually allowed to deduct depends on your income. A single filer with an adjusted gross income under $50,000 can claim the full amount while those with an income to $65,000 can receive a partial deduction. For a couple filing jointly, those amounts are $105,000 for the full deduction and $135,000 for the partial deduction. If you exceed $65,000 as a single filer or $135,000 for joint, you do not qualify for this deduction. Any borrower who paid more than $600 in student loan interest during the year, should receive Form 1098-E from their lender indicating the amount of interest paid.
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|Jennifer Mathes, Ph.D.|