How to Get a Student Loan Tax Deduction

How to Get a Student Loan Tax Deduction

OK, so that you’re at your first job, and it’s tax time!

Did you bear in mind you took out a student loan?

Well, the curiosity on that loan is a tax deduction!

In the article under, I’m going to get into the nitty-gritty of taxes.

However, do not forget that when submitting time comes, it’s possible you’ll wish to get an precise accountant that can assist you out.

After all, that is the IRS telling you what’s up, so there’s no guessing!

(Did You Know? The IRS can seize your tax refund in case you are operating late on student loan funds. Go by means of this BEFORE submitting your tax return this 12 months and see How To STOP Late Payments From Taking Your Tax Refund. Click right here to be taught extra and get the free information.)

Make Taxes Your Friend Through a Student Loan Tax Deduction

Myth Busters

First issues first, when you sadly can’t write off your student loan funds, you’ll be able to write off the curiosity.

For instance, my student loan curiosity write off totals my yearly funds.

That means I practically break even on my funds, tax sensible.

This goes to point out that the tax legal guidelines can work tougher for you, but it surely helps when you get skilled assist!

The IRS

While the IRS could also be an notorious unhealthy man in most individuals’s thoughts, you’ll be able to maximize their guidelines in your favor, if you understand how.

For instance, when you made federal student loan funds in 2016, it’s possible you’ll be eligible to deduct a portion of the curiosity paid in your 2016 federal tax return.

READ:   Who Actually Owns Student Loan Debt?

This is called a student loan curiosity deduction.

Don’t miss out on this chance to make the cash you’ve paid be just right for you!

Learn extra about reporting student loan curiosity funds from IRS Form 1098-E in your 2016 taxes and probably get this deduction.

– You may even do it subsequent 12 months!

What is IRS Form 1098-E?

IRS Form 1098-E is the Student Loan Interest Statement.

Your federal loan servicer will use this to report student loan curiosity funds to each the Internal Revenue Service (IRS) and to you.

Will I obtain a 1098-E?

If you paid $600 or extra in curiosity to a federal loan servicer through the tax 12 months, you’ll obtain no less than one 1098-E.

The IRS solely requires federal loan servicers to report funds on IRS Form 1098-E if the curiosity obtained from the borrower within the tax 12 months was $600 or extra.

However, some federal loan servicers nonetheless mail 1098-Es to debtors who paid lower than that.

Check together with your accountant!

If you paid lower than $600 in curiosity to a federal loan servicer through the tax 12 months and don’t obtain a 1098-E, it’s possible you’ll contact your servicer for the precise quantity of curiosity you paid through the 12 months.

Then, you’ll be able to report that quantity in your taxes.

How many 2016 1098-Es ought to I anticipate to obtain?

That will depend on how a lot you paid in curiosity, what number of federal loan servicers you had, and another elements.

Read by means of the situations under to search out the place you match and know what number of 2016 1098-Es you need to anticipate.

READ:   File your taxes in fourth yr of medical college! – Couple of Surgeons

Again, I can’t stress sufficient how a lot you want an accountant or different skilled assist!

  • Your present servicer was your solely servicer in 2016: In this case, your present federal loan servicer will give you a duplicate of your 1098-E when you paid curiosity of $600 or extra in 2016. Your servicer might ship your 1098-E to you electronically or through U.S. mail.
  • You had a number of servicers in 2016: In this case, every of your federal loan servicers will give you a duplicate of your 1098-E when you paid curiosity of $600 or extra to that particular person servicer in 2016. Your servicer might ship your 1098-E to you electronically or through U.S. mail.

If you paid lower than $600 in curiosity to any of your federal loan servicers, it’s possible you’ll have to contact every servicer as vital to search out out the precise quantity of curiosity you paid through the 12 months.

How will reporting my student loan curiosity funds on my 2016 taxes profit me?

tax deduction

Reporting the quantity of student loan curiosity you paid in 2016 in your federal tax return might rely as a tax deduction.

A tax deduction reduces the quantity of your earnings that’s topic to tax, which can profit you by lowering the quantity of tax you’ll have to pay.

Now that you already know student loans, rates of interest, and taxes aren’t as scary as you’ll have initially thought, you might be able to report your student loan rates of interest in your 2016 federal tax return.

READ:   Student debt cancellation advocates inspired by Biden, others stay skeptical

This all applies even when you bought an extension!

What if I nonetheless need assistance or have extra questions?

While I’m not a tax advisor and can’t advise you in your federal tax return questions, your federal loan servicer is obtainable to help you with any questions on your student loans.

This contains questions on IRS Form 1098-E and reporting the student loan curiosity you’ve paid in your 2016 taxes.

If you’re unsure who your loan servicer is, go to the Loan Servicers web page to search out out. Good luck!

(Did You Know? The IRS can seize your tax refund in case you are operating late on student loan funds. Go by means of this BEFORE submitting your tax return this 12 months and see How To STOP Late Payments From Taking Your Tax Refund. Click right here to be taught extra and get the free information.)

Have you gotten a student loan tax deduction prior to now? Have any ideas normally for these doing their taxes? Leave a remark under!

UP NEXT: The Student Life and Identity Theft

Leave a Comment

Your email address will not be published.