Student Loan Interest Tax Deduction Calculator
- August 14, 2018
- Posted by: Dave Rathmanner
- Category: Student Loans
One benefit of student loans is that you can get a significant deduction at tax time. You can deduct up to $2,500 in student loan interest payments on your taxes. Both payments made on federal student loans and private student loans are eligible. That $2,500 lowers the amount of income that is taxable by the government. Whether you make the standard payments or pay extra towards your loan, all of the interest is deductible. This student loan interest deduction calculator will show you just how much you can deduct from your taxes.
Here is an example of how the student loan interest deduction calculator works. Let’s say you make $40,000 in taxable income. But last year you made all of your monthly payments and paid $1,000 in interest on your student loans. That means that your taxable income has been lowered; the government would only tax you on $39,000 instead of the $40,000 you made, reducing how much you owe in taxes.
To qualify for the student loan interest tax deduction, you need to make under $80,000 if you are single or $160,000 if you are married. You must have been enrolled in school at least half-time and attend a college or university accredited by the U.S. Department of Education. To qualify, you’d have to be on the path towards some sort of degree or certificate, such as a bachelor’s or master’s degree.
Any student loans used for educational expenses are eligible; this includes funds used for room and board, books, and transportation. Also, it does not matter what repayment plan you are on; any interest you paid is still tax-deductible.
If you are not sure how much you paid in interest, check with your lender. Most companies will issue you Form 1098-E, which is the document that states how much interest you paid during the tax year.
Use the student loan interest tax deduction calculator to find out if you are eligible for the deduction, how much you can deduct and how it affects your taxable income.
You can see all of our student loan calculators here.
Author: Dave Rathmanner
Student Loan Guides
Student Loan Reviews