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lindabrekke2001
New Member

I'm co-signer on my daughter's student loan, who is not my dependent. I paid the student loans and would like to declare the interest. Is that possible?

 
5 Replies
Bsch4477
Level 15

I'm co-signer on my daughter's student loan, who is not my dependent. I paid the student loans and would like to declare the interest. Is that possible?

Yes. Since you paid the amounts and are legally responsible for the loan you can deduct the interest. 

HelenC12
Expert Alumni

I'm co-signer on my daughter's student loan, who is not my dependent. I paid the student loans and would like to declare the interest. Is that possible?

No, you can't claim the student loan interest because your daughter is not your dependent. 

 

You can claim the deduction if all of the following apply:

  • You paid interest on a qualified student loan in tax year 2020.
  • You can take the deduction as a student, or as a parent making payments on your dependent student’s loan. However, 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 a qualified student loan.
  • Your filing status isn't married filing separately.
  • Your MAGI is less than a specified amount, which is set annually.

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

For general state-specific questions, click here to find your state’s Department of Revenue.

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Hal_Al
Level 15

I'm co-signer on my daughter's student loan, who is not my dependent. I paid the student loans and would like to declare the interest. Is that possible?

No.  Unless the student had been your dependent at the time the loan was taken out and paid for tuition and other expenses.

 

Opus 17
Level 15

I'm co-signer on my daughter's student loan, who is not my dependent. I paid the student loans and would like to declare the interest. Is that possible?

If your daughter was your dependent when the loan was made, and you are the person making the payments, you can claim the student loan interest deduction even after she is no longer your dependent. 

 

Alternatively, your daughter can deduct the student loan interest as if you had given a gift of money to your daughter which your daughter used to make the loan payments.  (This is not usually allowed for most tax deductions but is allowed for the student loan interest deduction.). Sometimes, a parent might be disqualified from the deduction due to a higher income, for example, so that it is better for the student to take the deduction.  

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
Bsch4477
Level 15

I'm co-signer on my daughter's student loan, who is not my dependent. I paid the student loans and would like to declare the interest. Is that possible?

As Opus points out, as long as the student was a dependent when the loan was taken out and the parent is legally liable for the loan, the parent can claim the loan interest deduction even after the student is no longer a dependent. 

Per IRS Topic Number 456:

You can claim the deduction if all of the following apply:

  • You paid interest on a qualified student loan in tax year 2019;
  • You're legally obligated to pay interest on a qualified student loan;
  • Your filing status isn't married filing separately;
  • Your MAGI is less than a specified amount which is set annually; and
  • You or your spouse, if filing jointly, can't be claimed as dependents on someone else's return.

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

 

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