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coquinn5
New Member

I paid $1,393 in student loan interest, and it's telling me I can deduct "every single penny." So why am I only getting a couple hundred dollars refunded to me?

 
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Accepted Solutions
Coleen3
Intuit Alumni

I paid $1,393 in student loan interest, and it's telling me I can deduct "every single penny." So why am I only getting a couple hundred dollars refunded to me?

Deducting an amount from income and getting a refund are two very different things. Your interest will reduce your income, not give you a dollar for dollar refund.

You don't always get everything back. Filling out a tax return is a process of reconciliation for a particular year. All of your income is taken into account with all your deductions and personal exemption and possible credits. Next, you arrive at your taxable income. The withholding is used to pay tax on that income. If there is anything left over, you get it in the form of a refund.

The more income you have, the higher the tax bracket you may find yourself in. The higher the bracket, the bigger percentage of your income is taxed. Here are the brackets for 2017:

 

https://taxfoundation.org/2017-tax-brackets

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2 Replies
Coleen3
Intuit Alumni

I paid $1,393 in student loan interest, and it's telling me I can deduct "every single penny." So why am I only getting a couple hundred dollars refunded to me?

Deducting an amount from income and getting a refund are two very different things. Your interest will reduce your income, not give you a dollar for dollar refund.

You don't always get everything back. Filling out a tax return is a process of reconciliation for a particular year. All of your income is taken into account with all your deductions and personal exemption and possible credits. Next, you arrive at your taxable income. The withholding is used to pay tax on that income. If there is anything left over, you get it in the form of a refund.

The more income you have, the higher the tax bracket you may find yourself in. The higher the bracket, the bigger percentage of your income is taxed. Here are the brackets for 2017:

 

https://taxfoundation.org/2017-tax-brackets

I paid $1,393 in student loan interest, and it's telling me I can deduct "every single penny." So why am I only getting a couple hundred dollars refunded to me?

Deducting every penny is not the same as getting back every penny.  The student loan interest you paid lowers the amount of income you are taxed on.  It is not a refund.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
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