Can I take tax breaks for student loans I cosigned with my children? (the 1098-E is in my Son's name only but I am a cosigner?)

[MargaretL · Accepted solution]

You can - but you must also have paid the student loan in addition to be legally obligated to pay it back (and your are as a co-signer) to be able to deduct it's interest. And if you did pay, the data entry is as follows:

1. Federal Taxes
2. Deductions & Credits
3. Education
4. Select Student Loan Interest Paid (Form 1098-E) - follow the prompts

The issue may arise if 1098-E is not in your name. However, if you ever receive a letter from the IRS to "prove" that you were obligated to pay the loan, you can simply send them a copy of the loan with your name on it.

[michaelmross]

What does "have paid the student loan" mean? Paid off the student loan? Paid the interest on the student loan? And what does "obligated" mean? Does that include when your nondependent child not being able to pay?

[xmasbaby0]

@michaelmross 

The only thing you can deduct is the interest paid on the student loan.  If you signed for the loan yourself or if you co-signed you are legally obligated to pay it.     If you co-sign for your child and the child does not pay---you are on the hook for the loan, in other words.

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