According to the IRS, it’s possible to deduct interest you pay on a student loan on your taxes by writing it off as an adjustment to income. While not all student loan borrowers are entitled to this tax deduction, servicers are required to provide clear guidelines about returns so you can determine the amount of interest you’ve paid in the tax year.
You can claim a student loan deduction if you fit the following criteria:
- Your qualified student loan was a set amount of money you took out only to pay for qualified higher education fees and tuition expenses.
- You paid interest on your qualified student loan during the prior tax year.
- You must legally pay interest on your qualified student loan.
- You cannot be claimed as a dependent on someone else’s tax return.
- Your filing status isn’t “married filing separately.”
Unfortunately, some servicing companies make it deliberately difficult to attain the necessary information to claim deductions, which you’re entitled to as a borrower. As a result, many students and alumni lose out on potential tax write-offs totaling up to $2,500.
With 2014 on its way out, it’s important to make sure you have all your tax information in order and consult with a student loan professional. This means getting the correct paperwork and all relevant material from your loan servicer. You can also look at your monthly statements to calculate the amount of interest you’ve paid on your loans throughout the year. If you haven’t paid $600 or more in interest throughout the year, you can still write off your loans on your taxes, but you’ll have to ask more specifically for a form representing your payments in full.