Student Loan Interest Deduction You can take a tax deduction for the interest paid on student loans that you took out for yourself, your spouse, or your dependent. This benefit applies to all loans (not just federal student loans) used to pay for higher education expenses. The maximum deduction is $2,500 a year.

Can a parent deduct student loan interest?

One of the most common misconceptions about the student loan interest deduction is that a parent can claim it for helping make payments on their child’s loan. That is not the case. A parent can take the deduction only if they are personally liable for the loan.

What percentage of student loan interest is tax deductible?

The student loan interest tax deduction could save borrowers as much as $550. The student loan interest deduction is a tax break for college students and their parents who took on debt to pay for school. It allows you to deduct up to $2,500 in interest paid from your taxable income.

Is there a tax deduction for student loans?

Student loan interest can quickly add up. That’s why the Federal government introduced the student loan interest tax deduction to help ordinary students out. If you made interest rate payments on your student loans during the tax year, you can deduct up to $2,500 in interest paid.

When is the student loan interest deduction eliminated?

The deduction is reduced for taxpayers with modified adjusted gross incomes (MAGIs) in a certain phase-out range and is eventually eliminated entirely if your MAGI is too high. 4

Who is the CPA for the student loan interest deduction?

Janet Berry-Johnson is a CPA with 10 years of experience in public accounting and writes about income taxes and small business accounting for companies such as Forbes and Credit Karma. The student loan interest deduction is an advantageous “above the line” deduction that you can claim without itemizing.

Where does student loan interest go on a tax return?

The student loan interest deduction can be claimed “above the line” as an adjustment to income. You can take it without itemizing, or take the standard deduction as well. It’s subtracted on line 20 of the “Adjustments to Income” section of Schedule 1 of the 2020 Form 1040.