Hello,
My parents claim me as dependent, My parents are paying interest on my loan.
Question is can my parents deduct the interest even though the 1098E is on my name?
Thanks
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They can deduct the interest if they are liable for the loan.
But I was employed part time in 2019 and earned more than $6K. Am I allowed to deduct the 1098-E that is on my name or it can still be deducted by my parents on there tax since I am depended on them.
Thanks,
If you are a dependent now you can not deduct the interest. Even if you were not their dependent now, if your parents took out the loan when you were their dependent student and they are legally liable for the loan, they can take the deduction.
If you qualify to be claimed as a dependent on your parents' 2019 tax return, and your parents actually claim you as a dependent on their 2019 tax return, then they will report the 1098-E on their tax return if either or both of your parents co-signed the loan making them legally obligated to pay it.
But I was employed part time in 2019 and earned more than $6K
That doesn't matter. You could have earned a million dollars in 2019 (literally!) and still qualify to be claimed as a dependent on your parent's tax return. The requirements for your parents to qualify to claim you are:
1) The student was under the age of 24 on Dec 31 of the tax year and;
2) The student was enrolled as a full time student for *any* *one* *semester* that started in the tax year and;
3) The student was enrolled at an accredited university or trade school and;
4) The student was enrolled in a program of study that will lead to a degree or other credentialed certification and;
5) The student did not provide more than half of their own support for the *entire* year. (Scholarships, grants, 529 distributions, gifts from Aunt Mary, money from parents, etc *DO* *NOT* *COUNT* for the student providing their own support.)
Now in your case, there is no possible way you came anywhere close to providing more than half of your own support with only $6-7K of earned income for the whole year. Therefore your parents qualify to claim you as a dependent on their tax return. So you have no choice but to select the option for "I can be claimed on someone else's tax return". Understand that it does not matter if your parent's actually claim you or not. Just the fact that they "QUALIFY" to claim you, means you have to select that option on your own return.
Finally, since your parent's qualify to claim you as a dependent on their tax return, you can not get "ANY" credit for the interest paid on the 1098-E - even if you actually paid it with your little bit of earned income. Only your parent's can claim the 1098-E and get the credit for it.
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