Say I am an international, graduate student currently studying in the U.S. and am paying income taxes on my stipend. I have loans from my undergraduate education in a foreign country, and I am currently making interest payments on those loans. Can I apply the Student Loan Interest Deduction to the interest payments I am making for my foreign education loan?
Thank you.
There is no requirement that an educational loan be from a U.S. bank.
A Qualified Student Loan is a loan that was taken out solely to pay qualified education expense that were for the taxpayer, spouse, or a person who was a dependent (defined earlier in this course) when the loan was taken out.
The loan must be paid or incurred within a reasonable period of time before or after the loan was taken out, and for education provided during an academic period for an eligible student.
Loans from a related person or a qualified employer plan are not qualified student loans.
There is no requirement that an educational loan be from a U.S. bank.
A Qualified Student Loan is a loan that was taken out solely to pay qualified education expense that were for the taxpayer, spouse, or a person who was a dependent (defined earlier in this course) when the loan was taken out.
The loan must be paid or incurred within a reasonable period of time before or after the loan was taken out, and for education provided during an academic period for an eligible student.
Loans from a related person or a qualified employer plan are not qualified student loans.
If the loan meets the above requirements, you can deduct the interest.
Thank you Vince! I have a related follow-up question: How should I convert interest payments in foreign currency to US dollars? I.e. is there an "official" exchange rate should I use? Also, do I need to present any documentation in order to get the deduction? Or is this something I would have to get from my Chilean bank only in the case that the IRS asks for proof? Thanks again!
You would only need documentation in the event of an audit. I will need some time to research your first question