Can student loan interest be written off on your income taxes?
Frequently overlooked or forgotten, the interest derived from student loans can serve as a very large tax write-off come the Spring months.
Student loan interest is defined as the interest paid during the tax year on a qualified student loan.
What Constitutes a Qualified Student Loan?
Qualified student loans are those that meet the following criteria:
- They were taken out solely to fund higher education expenses: school tuition, fees, books, room and board, supplies, equipment and transportation.
- They cannot be administered from a related person or employer’s loan plan.
- They are loans that were for you, a spouse or a dependant.
- They relate to a certain academic period, and the proceeds of the loan obtained must
have been distributed to the recipient in the time between 90 days before the academic period and 90 days after the academic period.
- The student must have been enrolled at least half-time, and in a program that was designed to obtain a degree, certificate or educational credential.
How Much Can Be Written Off?
The maximum benefit any student can receive when writing off their student loans is $2,500.
An unmarried student making less than $55,000 annually can deduct up to the maximum of $2,500.
A married student filing jointly who makes less than $110,000 annually can also qualify for the maximum deduction of $2,500.
Students who make more than those figures can still receive a partial deduction if they make less than $75,000 a year, or $150,000 a year if married.