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Thread: Tax on Loans?

  1. #1
    Featured Member MadisonM's Avatar
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    Default Tax on Loans?

    I thought I would be able to totally pay for school myself this year, but my earnings have been much lower than expected, so I ended up taking out a loan from my bank for about $9000 to help out with the costs. This was not FAFSA financial aid, just a regular loan from the bank. I'm currently paying it back. Does anyone know if I will need to pay taxes on this amount? When I took out the loan, the money was put directly into my savings account so I could use it as needed. I've been sending in my quarterly taxes, but haven't taken this loan into account at all. If anyone knows if I'll have to pay taxes on this, that would be great. Thanks!
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    God/dess VenusGoddess's Avatar
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    Default Re: Tax on Loans?

    No, because it is not considered income. Depending on the type of loan it is, you may be able to write off the interest. Don't quote me on that...but, I think that there are some loans you can write interest off on (if you use it for something like school).

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    Featured Member MadisonM's Avatar
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    Default Re: Tax on Loans?

    ^^^ Thanks! I'll have to find out what kind of loan it was, because I'm currently paying it off, and the interest is 11.84% I believe.
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    God/dess VenusGoddess's Avatar
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    Default Re: Tax on Loans?

    ^ And, make sure you check with your accountant to see if its one that you can write off...

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    Featured Member Katherine's Avatar
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    Default Re: Tax on Loans?

    VG beat me to the punch. Keep all documentation and talk to your accountant about the possibility of writing off the interest.

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    Default Re: Tax on Loans?

    I can confirm that you will not have to pay taxes on it but it is highly unlikely that it will be tax deductible. You would have to take out a traditional student loan. I suggests that you take out enough money from the student loan to pay off your bank loan. That way you will be able to deduct the interest. If you need additional information shot me a pm. Good Luck.

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    Featured Member lunchbox's Avatar
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    Default Re: Tax on Loans?

    Quote Originally Posted by MadisonM View Post
    the interest is 11.84%
    Ouch!

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    Featured Member MadisonM's Avatar
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    Default Re: Tax on Loans?

    ^^^ Yes I will be paying it off as quickly as possible.... lol....
    Take the road less traveled- just make sure you have a map.

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