You can't claim the loan itself, but the interest you paid during the year on a qualified student loan used to pay for tuition, fees, room and board, books and supplies for yourself, your spouse, or your dependent is deductible. This includes both required and voluntarily pre-paid interest payments.
- Student loan interest is reported on Form 1098-E. If you paid $600 or more of interest on a qualified student loan during the year, you'll receive this form from your lender.
Here's how to enter your student loan interest in TurboTax. We'll ask you ask you questions to make sure you qualify, and also calculate how much of a deduction you’re entitled to. For more on qualifications, see below.
How much can I deduct?
- You may deduct the lesser of $2,500 or the amount of interest you actually paid during the year.
- The deduction is gradually reduced and eventually eliminated by phaseout when your modified adjusted gross income (MAGI) amount reaches the annual limit for your filing status.
Qualifications:
You can claim the deduction if all of the following apply:
- You were legally obligated to pay interest on a qualified student loan. (See ‘Legally Obligated” below)
- You paid the interest.
- Your income (MAGI) is less than the specified amount. (See above)
- You (or your spouse, if filing jointly) can’t be claimed as a dependent on someone else’s return.
- You are not ‘married filing separately.’
A qualified student loan is a loan you took out solely to pay qualified higher education expenses that were:
- For you, your spouse, or a person who was your dependent when you took out the loan;
- For education provided during an academic period for an eligible student; and
- Paid or incurred within a reasonable period of time before or after you took out the loan.
What does ”Legally obligated” to pay interest on a qualified student loan mean?
This means that you either signed for the loan yourself, as the student; or you cosigned for the loan as a parent or other cosigner.
For more information about the student loan interest deduction and how your MAGI affects the deduction amount, refer to IRS Publication 970.
