Let’s be honest: Does anyone actually look forward to doing taxes? The whole process feels like an overly complex homework assignment from a fuddy-duddy teacher.
But the next time you find yourself frantically searching for your W-2 form or trying to figure out where you put the shoebox with your receipts, think about the money you might get back from your deductions.
If you paid on student loans in the prior tax year, you might just qualify for the student loan tax deduction, which allows borrowers to deduct up to $2,500 in interest they paid from their taxable income.
Getting a refund? Whether you’re considering putting it toward skydiving for the first time or you’re planning to use it to pay off more student loan debt, here are some things you should know about the student loan interest deduction and whether you qualify.
How the Student Loan Tax Deduction Works
The student loan tax deduction isn’t a magical discount that’s taken off your monthly student loan payment like a coupon at the grocery store checkout. Instead, you pay the interest out of pocket throughout the tax year and claim the interest you paid when you do your taxes.
The interest applies to qualified student loans that were used for tuition and fees; room and board; coursework-related fees, books, supplies, and equipment; and other necessary expenses like transportation.
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Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
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Source: sofi.com