Only the taxpayer legally obligated to make interest payments under the terms of the education loan can claim the student loan interest deduction
Further, the 2001 Act increases the income phase-out ranges for eligibility for the Student Loan Interest Deduction
to $50,000 to $65;000 for single taxpayers and to $100,000 to $130,000 for married taxpayers filing joint returns.
Some tax incentives are available both while attending college and after graduation, such as the Lifetime Learning Credit, already discussed, and the student loan interest deduction
and work-related education deduction discussed below.
To calculate the Student Loan Interest Deduction
, taxpayers need to obtain IRS Form 1098-E from their loan servicer.
Parent(s) may claim the student loan interest deduction
if the parent(s) borrow the money in a year in which the parent(s) supplies more than half of the student's support.
Both student and parent borrowers may claim the student loan interest deduction
, which allows them to deduct interest payments they made on their higher education loans during the 2002 tax year.
Grassley also was instrumental in expanding the student loan interest deduction
tax credit that is used by many dental school graduates.
Neither are some deductions, such as those covering student loan interest, deductible IRA contributions, and student loan interest deduction
Couples should note that certain credits-including the Child and Dependent Care Credit, the Earned Income Tax Credit, the Hope or the Lifetime Learning Credit or the student loan interest deduction
, to name a few-are not available under the "married filing separately" status.
Student Loan Interest Deduction
- The interest on student loan payments made during 2006 is deductible up to $2,500.
Although there are some restrictions on how the benefits can be taken in combination, it is important to remember that the student loan interest deduction
can be taken with any other education-related benefit.
New for this year: the income ranges for phasing out the student loan interest deduction
may be adjusted annually for inflation.