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There is no direct federal tax credit for paying student loan principal, but you can claim a federal tax deduction for up to $2,500 of interest (not the amount of the whole payment) paid on qualified student loans. This deduction reduces your taxable income, and you do not need to itemize to claim it.
In TurboTax (TT), enter at:
Federal Taxes Tab (Personal for H&B version)
Deductions & Credits
-Scroll down to:
--Education
-Student Loan Interest paid (form 1098-E) It is an adjustment to income (above the line deduction).
Hi, there IS a credit in Maine, so sorry for not clarifying, this is for a state return in Maine. And this credit allows for $2500 PER PERSON, but we are filing jointly and Turbotax is only allowing me to fill in one form. Previous years I was able to do this with no issue.
The section Credit for Student Loan Repayment has two sets of questions, one for the taxpayer and one for the spouse - provided each spouse earned at least $13,712
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