Student Loans Can Make a Difference
Not only is a good education valuable but it also can pay dividends on your tax return. If you took out student loans to pay for your education then it's a good possibility you will be eligible to receive up to $2500 of the interest you paid on your loans.Itemizing your deductions is not a necessity to receive your tax break. You cannot file deductions from the standard 1040EZ form; you must file a 1040A Form or a 1040Form to receive a tax deduction from the interest of your loans. The IRS forbids married couples from filing separate to get this tax break. If you're married you must file jointly to be eligible for the loan interest deduction. Regardless of if you're married or not, if you are claimed as an exemption on someone else’s returns then you are not eligible for this tax break.
There are a few guidelines that the IRS has put in place to receive tax deduction from your student loans.
• The purpose of the loans must be for educational purposes only. You cannot get a personal loan and expect the IRS to deduct the interest from it just because it was taken out for educational purposes.
• If you take out a home equity loan for educational purposes, it's a possibility you can qualify for a tax break in allowed mortgage interest but you can not also use it to claim a tax break for educational purposes.
• You must be able to prove the loans have been used specifically for education purposes like tuition, rent, books, and supplies you might need to assist you with your education. These expenses must occur within a reasonable period of time. The IRS can track expenses for education to a semester or quarter.
Contributing National Staff Writer
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