Alright, I have a question on how to claim part time residency student loan interest on state returns where in one state it is phased out due to too high of income.
$30K Income in AZ where I lived 70% of the year and $85K in Oregon where I lived 30%. Paid $10K of student loan interest throughout 2019. Too high of Oregon income phases out student loan interest deduction so no benefit there. Can I claim the $2500 max deduction on my AZ statement? Or do I need to claim 70% x $2500 = $1750?
You will claim 70% of the student loan interest paid during the tax year. According to the instructions for Arizona Form 140PY, you can claim the amount paid while you were an Arizona resident.
I think where I'm getting hung up is I paid $10K of student loan interest throughout the year. 70% of my time was in AZ so I paid $7K while in AZ. Do I base the 70% off $10K actually paid or the $2.5K deduction cap? Keeping in mind that I am not able to claim the deduction in the non AZ state due to income being above the threshold.