Student Loan Interest to Deduction Mismatch

[N7Millennial]

Hey there!

Not like this will change my final tax calculations, but I noticed that when I enter my 1098E interest paid into my TurboTax software it shows correctly. Then, however, the final calculated deduction I receive is $8 lower than my entered interest (for example, if I paid $300 in interest, the software shows this as $300 in interest throughout the deductions section, but then lists my student loan interest deduction as $292 in the summary calculation). Again, it's a small discrepancy and isn't going to change my taxes, but this has never happened before, I looked back to confirm and it's always matched 1:1 and I'm wondering if I'm missing something here.

Has something changed in the student loan interest deduction that I cannot find in my Google searching? Is this just a me thing or are others noticing this too?

Thanks in advance one and all for indulging my curiosity and OCD.

[rjs]

Is your Adjusted Gross Income (AGI), before the student loan interest deduction, more than $70,000 ($140,000 if married filing jointly)? The student loan interest deduction begins to phase out at that income level.

If you claim the foreign earned income exclusion or foreign housing exclusion or deduction, you have to add those back to your AGI to calculate the phase-out.

[RaifH · Accepted solution]

It may be that your Student Loan Interest Deduction is being limited due to your adjusted gross income. If you are not married and your modified adjusted gross income is between $70,000 and $85,000 you are still getting a deduction, but the amount is gradually reduced and no longer dollar for dollar. Same if you are married filing jointly with incomes between $140,000 and $170,000. Married filing separate individuals are not eligible for the student loan interest deduction. The IRS Publication 970 details the calculation and what constitutes your modified adjusted gross income. You also cannot deduct more than $2,500 of student loan interest, but it does not sound like that is the issue you are encountering. 

[N7Millennial]

For the first time ever, yeah I am just over $70k in AGI. Ok, this is helpful to know. Thank you!

[N7Millennial]

Yep, especially with the ongoing student loan interest freeze, my interest hasn't been over the $2.5k max deduction since that COVID relief started. Also, yep, for the first time ever, yeah my AGI is just over $70k. This is helpful to know, thank you!