Student Loan Interest Deduction Lockport IL

Eligibility
You can deduct a maximum of $2,500 for student loan interest. To be eligible:

• You must be legally responsible for payments on a loan used to finance higher education
expenses.

• Your loan must finance your education, your spouse's education, or your child's
education.

• The qualifying student must have be enrolled at least half-time and working towards a
recognized credential at an eligible institution.

If you are married filing separately, or if someone else claims you as a dependent, you are not eligible for the student loan interest deduction.

Tips for Savvy Taxpayer
It's easy to take this deduction if you’re eligible--and it's easy to overlook in the sea of paperwork tax preparation involves.
• Watch your mail. Your lending institution will send you a Form 1098-E if you
paid $600 or more in interest on a student loan. The amount of interest you paid will
be reported on Form 1098-E, box 1. If you do not receive this form, contact the
lending institution.

• Deduct on Form 1040. You can claim the Student Loan Interest Deduction on
Form 1040 Line 33 or on Form 1040A Line 18.

• Know the limits. The maximum amount of student loan interest you can claim
is $2,500. The deduction is also limited by your total income. IRS Publication 970
includes a worksheet to calculate your deduction.

By following these tips it is easy to claim the student loan interest deduction. Doing so can make paying your taxes a little less painful this year.



Sources:
Internal Revenue Service
Federal Student Aid

Starting in the 2009 tax year, under the American Recovery and Reinvestment Act (ARRA), more parents and students will qualify over the next two years for a tax credit, the American Opportunity Credit, to pay for college expenses.

The American Opportunity Credit is not available on the 2008 returns taxpayers are filing during 2009. The new credit modifies the existing Hope Credit for tax years 2009 and 2010, making the Hope Credit available to a broader range of taxpayers, including many with higher incomes and those who owe no tax. It also adds required course materials to the list of qualifying expenses and allows the credit to be claimed for four post-secondary education years instead of two. Many of those eligible will qualify for the maximum annual credit of $2,500 per student.

The full credit is available to individuals whose modified adjusted gross income is $80,000 or less, or $160,000 or less for married couples filing a joint return. The credit is phased out for taxpayers with incomes above these levels. These income limits are higher than under the existing Hope and Lifetime Learning Credits

Click here to read more from irs.gov

Click here for application form