Results 1 to 11 of 11

Thread: student loans and tax breaks

  1. #1
    Veteran Member
    Joined
    Nov 2008
    Posts
    237
    Thanks
    0
    Thanked 4 Times in 3 Posts

    Default student loans and tax breaks

    I have around 20k in student loans. One of these loans has an interest rate of 4.8 for the first two years that i borrowed and 6.8 for the last two years. The high interest rate scares me enough that i think I should pay it off ASAP but i hear you can get a tax break from the loans? How much money do you get back?
    Lets say I pay 1k in interest a year from these loans. Would I get all of that 1k back if i make less than 60k a year?
    I have a car loan right now with only a 2 percent interest rate. Im not as worried about that one because of the low interest rate, but this isnt tax deductable whereas the student loan interest is. Should i try to pay the car off before the student loan?

  2. #2
    God/dess Zofia's Avatar
    Joined
    Apr 2002
    Location
    Durham, North Carolina
    Posts
    2,417
    Thanks
    2,964
    Thanked 2,370 Times in 934 Posts

    Default Re: student loans and tax breaks

    Student loans are not tax deductible, nor are car loans. Currently, only home mortgage interest is deductible for most taxpayers. Business interest is deductible though.

    HTH
    Z

  3. #3
    Veteran Member
    Joined
    Nov 2008
    Posts
    237
    Thanks
    0
    Thanked 4 Times in 3 Posts

    Default Re: student loans and tax breaks

    Quote Originally Posted by Zofia View Post
    Student loans are not tax deductible, nor are car loans. Currently, only home mortgage interest is deductible for most taxpayers. Business interest is deductible though.

    HTH
    Z
    the interest you pay is tax deductible, not the loan in itself. Sorry I can see how you would get that i was asking if the loan itself is deductible, but i meant the interest.

  4. #4
    God/dess Zofia's Avatar
    Joined
    Apr 2002
    Location
    Durham, North Carolina
    Posts
    2,417
    Thanks
    2,964
    Thanked 2,370 Times in 934 Posts

    Default Re: student loans and tax breaks

    Only mortgage (limited to two homes at a time) interest is tax deductible. Not student loan interest or auto loan interest.

    HTH
    Z

  5. #5
    Veteran Member
    Joined
    Nov 2008
    Posts
    237
    Thanks
    0
    Thanked 4 Times in 3 Posts

    Default Re: student loans and tax breaks

    Really?

  6. #6
    God/dess Zofia's Avatar
    Joined
    Apr 2002
    Location
    Durham, North Carolina
    Posts
    2,417
    Thanks
    2,964
    Thanked 2,370 Times in 934 Posts

    Default Re: student loans and tax breaks

    You are right, for a "qualified" student loan, the interest is deductible subject to limits.

    Z

  7. #7
    Veteran Member
    Joined
    Nov 2008
    Posts
    237
    Thanks
    0
    Thanked 4 Times in 3 Posts

    Default Re: student loans and tax breaks

    What would be an unqualified student loan?

  8. #8
    God/dess Zofia's Avatar
    Joined
    Apr 2002
    Location
    Durham, North Carolina
    Posts
    2,417
    Thanks
    2,964
    Thanked 2,370 Times in 934 Posts

    Default Re: student loans and tax breaks

    Quote Originally Posted by pinkpuff View Post
    What would be an unqualified student loan?
    Read the circular.

    Disclosure under IRS Circular 230: To insure compliance with recently released Internal Revenue Rules, this communication was not written or intended to be relied on to avoid federal tax related penalties or for promoting, marketing or recommending to any party any tax related matters addressed herein.

  9. #9
    Veteran Member
    Joined
    Nov 2008
    Posts
    237
    Thanks
    0
    Thanked 4 Times in 3 Posts

    Default Re: student loans and tax breaks

    sorry i dont get it...maybe im dumb but that text you posted doesnt say which loans qualify and which dont. i have government issued need based loans. i just want to know how the tax deduction of the interest payed per year works.

  10. #10
    God/dess Zofia's Avatar
    Joined
    Apr 2002
    Location
    Durham, North Carolina
    Posts
    2,417
    Thanks
    2,964
    Thanked 2,370 Times in 934 Posts

    Default Re: student loans and tax breaks

    Sorry for being repetitive, but beyond telling you to read the circular and read the disclosure below, I cannot give any more advice.

    HTH,
    Z

    Disclosure under IRS Circular 230: To insure compliance with recently released Internal Revenue Rules, this communication was not written or intended to be relied on to avoid federal tax related penalties or for promoting, marketing or recommending to any party any tax related matters addressed herein.

  11. #11
    Newbie
    Joined
    Jan 2009
    Location
    Scottsdale, AZ
    Posts
    5
    Thanks
    0
    Thanked 0 Times in 0 Posts

    Default Re: student loans and tax breaks

    As already noted, the student loan interest expense deduction is subject to some eligibility and income limitations.

    You should receive a Form 1098-E (Student Loan Interest Statement) from your student loan providers(s). They are not required to send it unless it is greater than $600. Some send it regardless of amount.

    The deductible amount goes on line 33 of Form 1040. Tax savings will range from 0% - 25% of interest expense.

Similar Threads

  1. I hope nobody is looking for new student loans !
    By Melonie in forum Member Boards
    Replies: 0
    Last Post: 04-26-2008, 06:46 AM
  2. Consolidating Student Loans
    By AudreyLeigh in forum Dollar Den
    Replies: 2
    Last Post: 11-15-2007, 03:08 PM
  3. Those of you who have paid off student loans
    By Susan Wayward in forum Dollar Den
    Replies: 11
    Last Post: 07-30-2007, 11:01 PM
  4. Student Loans
    By hardkandee in forum Dollar Den
    Replies: 8
    Last Post: 04-05-2007, 09:49 PM
  5. student loans and taxes
    By Miss George in forum Dollar Den
    Replies: 4
    Last Post: 02-07-2005, 05:54 PM

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •