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June 4, 2019
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Why did my federal refund decrease so much when I put in the student loan interest I paid?

  • June 4, 2019
  • 1 reply
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My federal refund was at a couple hundred dollars and then when I put in the student loan interest that I paid my AZ refund went up, but my federal refund went down to $52. Why is that?
Best answer by

Only $2,500 of student loan interest can be reported on a federal tax return. 

The student loan interest is entered as an Adjustment to Income, not a tax refund or credit. 

An adjustment to income reduces the Adjusted Gross Income thereby reducing the amount of taxable income.


1 reply

Answer
June 4, 2019

Only $2,500 of student loan interest can be reported on a federal tax return. 

The student loan interest is entered as an Adjustment to Income, not a tax refund or credit. 

An adjustment to income reduces the Adjusted Gross Income thereby reducing the amount of taxable income.