How do I claim student loan interest deduction if my loan is from Prodigy Finance (UK) and I don’t have Form 1098-E but have payment records (i.e., interest statement)?

[sharma-ashish7007]

When I go to the Student Loan Interest Deduction section, TurboTax asks if I received a 1098-E. If I select “No, this doesn’t apply to me,” I am not given an option to manually enter my interest paid. Since foreign lenders do not issue 1098-E forms, I need a way to input this information so that it is properly reported on Schedule 1, Line 21 of Form 1040. Could you please advise on how I can manually enter my student loan interest in TurboTax Desktop? If this is not possible, is there an alternative workaround?

[DawnC]

You need to answer Yes to receiving a 1098-E.   Then enter the information from your records.  You can claim the deduction in tax year 2024 if all of these apply:

• You paid interest on a qualified student loan in tax year 2024
• You, or your spouse if filing jointly, can't be claimed as dependents on someone else's return
• You're legally obligated to pay interest on the qualified student loan
• Your filing status isn't Married Filing Separately

Note: 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.
• Paid or incurred within a reasonable period of time before or after you took out the loan
• Paid within a reasonable period of time before or after taking out the loan

You can deduct up to $2500 if you qualify - See this TurboTax FAQ

[ashish7007]

Hello Dawn, 

Thank you for your detailed response. I really appreciate it.

I have a follow-up question from a legal and ethical standpoint: Since I did not actually receive a Form 1098-E, would it be considered misrepresentation or legally problematic to answer “Yes” to that question in TurboTax, even if the purpose is simply to enable manual entry of valid student loan interest from a foreign lender? I want to be sure that my tax return is both accurate and compliant with IRS requirements, and I’m unsure whether using this workaround crosses a line in terms of truthfulness on the return. 

[DaveF1006]

No. Your UK institution isn't an eligible institution,  which explains why there is no form 1098-E. According IRS Publication 970,  the institution must be eligible to participate in a student aid program administered by the US Department of Education. Foreign institutions don't meet this criteria. 

You were right in questioning the ethical concerns regarding this deduction.

[ashish7007]

Hello Dave, 

Thank you for clarifying this - I really appreciate your insight and confirming my concerns. It’s helpful to understand that the issue isn’t just about the Form 1098-E, but that the foreign lender itself (like Prodigy Finance) isn’t considered an eligible institution under IRS guidelines. That clear things up. I also had a chance to speak with a TurboTax Specialist over the phone, and they confirmed the same. 

Thank you much!