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tandkretired
Returning Member

1098E

My son is paying this loan. Can he claim the interest paid? The loan is to me the parent  but he pays it.

3 Replies
xmasbaby0
Level 15

1098E

STUDENT LOAN INTEREST

Only the person whose name is on the student loan and who is legally obligated to pay the loan can deduct the student loan interest.  If you did not sign or co-sign for the loan you cannot deduct the interest.

You cannot deduct student loan interest if you are being claimed as someone else’s dependent, or if you are filing as married filing separately.

The student loan interest deduction can reduce your taxable income by up to $2500

There is a phaseout for the Student loan interest deduction, which means the amount you can deduct gets reduced when your modified adjusted gross income hits certain income levels and is even eliminated at certain income levels -  

• If your filing status is single, head of household, or qualifying widow(er), then the phaseout begins at $65,000 until $80,000, after which the deduction is eliminated entirely.

• If your filing status is married filing joint, then the phaseout beings at  $130,000 until $160,000, after which the deduction is eliminated entirely.

Enter the interest you paid for your student loan by going to Federal>Deductions and Credits>Education>Student Loan Interest Paid in 2019 (Form 1098E)

Look on your 2019 Schedule 1 line 20 to see your student loan interest deduction

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
DianaGL
New Member

1098E

We took out multiple Parent PLUS loans for our son, Jonny.  He has now graduated and is making the payments on those loans and on federal direct loans he took for university education. 

I received the Form 1098E in my name for large interest paid on the Parent PLUS portion of loans.  But Jonny is making the payments.  So, HE should get the credit.  He is making much less than we are and he would benefit from the deduction.  Isn't that the intent of the IRS law anyway?  To provide a break to those who are payment student loan debt?  Well, in this case, HE is making the payments, but the 1098-E is being issued to us, the parents, and we cannot benefit from it because we make too much money.

 

SO, being "legally obligated" can also mean a "loan agreement" between me and my son.  I can draw up a loan/promissory note, where he agrees to make the Parent PLUS loan payments.  That would make him "legally obligated".  And then I'm deducting the interest from Form 1098-E on his tax return.  

 

BTW, I already tried calling the loan servicer but they won't change it.

NCperson
Level 15

1098E

whomever borrowed the money from the bank is the party that is eligible to deduct the interest.  Sounds like in this case that is the parents.  

 

Signing something between the parents and the son doesn't change who is liable in the eyes of the Bank.

 

The bank doesn't have any incentive to change who is liable. 

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