Why Isn't the Interest on My Student Loan Tax Deductible?

You may not be able to deduct all of the interest you pay on a student loan.

In many cases, the interest you pay on a student loan is tax-deductible. Only a certain amount can be deducted from your taxes, however, and if your income exceeds certain limits, you cannot deduct any of the interest.

Who Can Deduct Student Loan Interest?

If your adjusted gross income (AGI) for the tax year is less than $75,000 (if single) or $150,000 (if married filing jointly), you may be able to deduct student loan interest for yourself, your spouse (if you file jointly) and your dependents. If you earn more than this amount, you cannot deduct student loan interest.

What Forms Do I Need?

You need a 1098-E form to claim a deduction for student loan interest. This form will be mailed to you by the servicer of your student loan. It will indicate the total amount of interest you paid on the student loan during the calendar year.

Where Is the Deduction Taken?

Claim the interest paid on Form 1040, Line 33 or Form 1040A, Line 18.

Income Limitations -- for Singles

If you are single, the maximum interest deduction you can claim is $2,500 and your adjusted gross income cannot exceed $60,000. If your AGI is between $60,000 and $75,000, you can deduct a pro-rated amount. These amounts apply to the 2010 tax year and are subject to change.

Income Limitations -- for Married Couples

Married couples filing joint returns can claim a maximum interest deduction of $2,500 and total AGI cannot exceed $120,000. Couples earning between $120,000 and $150,000 may deduct a pro-rated amount.

References

• IRS.gov: Tax Benefits for Education