Can i claim student loan interest deduction for loan taken for my spouse ( F 1 visa visa holder ) ? the loan taken from foreign bank located in foreign country.

[Opus 17 · Accepted solution]

Possibly.  First, you have to file a joint return.  Being married, you have to file a joint return or a married filing separate return.  MFS is disallowed from the student loan interest deduction.  Because your spouse is on an F-1 visa, they are generally considered non-resident aliens and don't file a tax return, or file a 1040-NR, meaning you normally file MFS.  You can make an election to treat them as a resident alien in order to file a joint return, which would allow you to deduct the interest, but making the election has pros and cons. https://www.irs.gov/individuals/international-taxpayers/nonresident-spouse-treated-as-a-resident

Then second, the loan has to be qualifying.  It has to be for qualified education expenses paid to a school that is accredited to participate in the federal student aid programs, and the loan has to be closely related in time and purpose to the education.  It does not necessarily have to be an official government or private student loan, but it can only be used for qualified expenses.  (Even a credit card would count, but only if the money was used for tuition and qualified expenses,  and you never charged anything else to the card that would mix education and other borrowing.)  Also, the loan can't be from a relative.

[raj2]

So by making election to treat my spouse as resident i cal file MFJ and claim deduction for student loan ( foreign loan used for qualified education purpose ) interest deduction. Am i correct ?

[Opus 17]

Yes.  However, making the election subjects your spouse's world-wide income to us taxation, while as a non-resident, only their us income would be taxed in the us. So, if she has non-us income, you may lose more than you gain.  If no non-us income, you'll probably come out ahead making the election.

[raj2]

Thank you Opus.................