One of the major benefits of paying on a student loan is that you will receive a tax break at the end of the year. Here are the tax details associated with student loans.

Student Loan Tax Break

When you are making payments on a student loan, you will undoubtedly be paying some type of interest to your lender. According to the IRS, you will be able to deduct the amount of interest that you pay on your student loans when you file your taxes. For every dollar that you pay in student loan interest, you will be able to deduct a dollar from your taxable income. In order to qualify for this deduction, you have to itemize your deductions instead of taking the standard deduction.

Documentation

Luckily, you will not have to keep track of how much interest you pay to your lender every year. At the end of the year, you will receive an itemized statement from your lender that tells you how much money you have paid to them in interest for the year. This form is known as a 1098-E. When you file your taxes, you will enter the amount from the form onto your tax return.


Need a Student Loan? Click here!
blog comments powered by Disqus