Reduce your tax payments by claiming an interest payment
deduction.
If you are busy paying off your student loans, the last thing
you want to do is to pay interest on the money that you're about
to give right back to the government. Luckily, in a lot of cases
you should be able to deduct the amount of interest that you
paid on your student loans. Deducting interests on student loans
is not very difficult to do as long as you make sure that you
meet the requirements for claiming this particular deduction on
your taxes.
First of all, you have to have the proper filing status - which
in this case means that you can be of any filing status except
for if you are married and still filing your taxes separately.
There is no explanation given as to why this particular status
is exempt, however, this is still important to take note of
before you waste your time trying to fill out a deduction that
you cannot claim.
The other thing that is necessary in order for you to claim that
deduction is that you cannot have another person claim you as a
dependent or a tax exemption on their own tax forms. For most
people who have already graduated from college and are trying to
pay off their student loans, this should not be too much
trouble. However, you should still make sure that nobody in your
life is still claiming you as a tax deduction.
Finally, you have actually pay the interest on your student loan
before you can claim it as a deduction. This also only works if
you are the only person who has an actual obligation to pay off
the loan. Therefore, you will not be able to claim a deduction
if you are paying interest on a loan that both you and your
parents owe money on, or on a parent PLUS loan.
You can also claim interest as a deduction if you are paying off
the interest on a student loan that is owed by your dependent.
However, in this case you can only deduct the payment if you are
actually the person who is obligated to pay off the loans. You
also need to claim an exemption for that dependent on your tax
return.
About the author:
Jakob Jelling is the founder of
http://www.cashbazar.com. Visit
his website for the latest on personal finance, debt
elimination, budgeting, credit cards and real estate.
