Starting in 1998, taxpayers who have taken out qualified loans to pay certain costs of attending an eligible educational institution for themselves, their spouse, or their dependent are allowed to take a deduction from gross income for the interest they paid on these student loans. Prior to 2002, deduction of student loan interest was limited to the first 60 months of required interest payments, and, was subject to income limitations. Beginning in 2002, interest paid over any period of time on a qualified education loan is deductible. There are also income limits. For more information, refer to Publication 970, Tax Benefits for Higher Education; and Tax Topic 456, Student Loan Interest Deduction.

References:

• Publication 970, Tax Benefits for Higher Education
• Tax Topic 456, Student Loan Interest Deduction

The maximum deductible interest on a qualified student loan is $2,500 per return. If you are a taxpayer whose return status is married filing jointly, you are allowed to deduct the full $2,500 only when your Modified Adjusted Gross Income (MAGI) is $100,000 or less. If your MAGI is between $100,000 and $130,000, the amount of your student loan interest deduction is gradually reduced. The instructions for Form 1040 (PDF) show you how to compute the deduction. If your MAGI is $130,000 or more, you are not able to take any deduction.

For those whose filing status is single, head of household, or qualifying widow(er), the full $2,500 deduction is allowed for MAGI levels equal to or below $50,000. For MAGI between $50,000 and $65,000, the deduction amount is phased out, and computation instructions are provided in the Instructions for Form 1040. If your MAGI amount is, $65,000 or more, there is no deduction.

There is no deduction if you file as married filing separately, if you are claimed as a dependent, or if the loan is from a related party or a qualified employer plan. For more information, refer to Publication 970, Tax Benefits for Higher Education ; Tax Topic 505, Interest Expense ; and Tax Topic 513, Educational Expenses .

References:

• Publication 970, Tax Benefits for Higher Education
• Tax Topic 505, Interest Expense
• Tax Topic 513, Educational Expenses

The deduction is limited to $2,500 per return for tax year 2001 and beyond. If you file as "married filing separately," there is no deduction. For more information, refer to Publication 970, Tax Benefits for Higher Education; and Tax Topic 505, Interest Expense.

References:

• Publication 970, Tax Benefits for Higher Education
• Tax Topic 505, Interest Expense
• Tax Topic 513, Educational Expenses

No, you cannot claim the deduction in any tax year in which your filing status is "married filing a separate return." For more information, refer to Publication 970, Tax Benefits for Higher Education, Tax Topic 505, Interest Expense; and Tax Topic 513, Educational Expenses.

References:

• Publication 970, Tax Benefits for Higher Education
• Tax Topic 505, Interest Expense
• Tax Topic 513, Educational Expenses

If your daughter was your dependent when you received the loan, the interest you paid on the loan is deductible, provided all other requirements are met. For more information, refer to Publication 970, Tax Benefits for Higher Education; Tax Topic 505, Interest Expense; and Tax Topic 513, Educational Expense.

References:

• Publication 970, Tax Benefits for Higher Education
• Tax Topic 505, Interest Expense
• Tax Topic 513, Educational Expenses

You will not be able to take a deduction for the student loan interest that you pay because you are not the one obligated to pay on the loan. However, your mother may take the deduction, provided all other requirements for the deduction are met. The payment made by you is treated as a gift to her, and then a payment by her. For more information, refer to Publication 970, Tax Benefits for Higher Education; Tax Topic 505, Interest Expense; and Tax Topic 513, Educational Expenses.

References:

• Publication 970, Tax Benefits for Higher Education
• Tax Topic 505, Interest Expenses
• Tax Topic 513, Educational Expenses

In order for a taxpayer to claim a deduction for student loan interest, the loan must be incurred for the taxpayer, the taxpayer' spouse, or a person who was the taxpayer's dependent when the taxpayer took out the loan. Since you were not your parents' dependent when they took out the student loan, the interest they paid on the loan does not qualify for deduction. However, the student loan interest payments you made on the student loan you took out on your behalf are eligible for deduction, provided all the other requirements are met. For more information, refer to Publication 970, Tax Benefits for Higher Education; Tax Topic 505, Interest Expense; and Tax Topic 513, Educational Expenses.

References:

• Publication 970, Tax Benefits for Higher Education
• Tax Topic 505, Interest Expense
• Tax Topic 513, Educational Expenses

No, payments on your student loans do not qualify for the Lifetime Learning Credit. However, interest on student loans may be deductible for Federal income tax purposes if you meet certain conditions. For more information, refer to Publication 970, Tax Benefits for Higher Education.

References:

• Publication 970, Tax Benefits for Higher Education
• Tax Topic 605, Education credits
• Form 8863 (PDF), Education Credits (Hope and Lifetime Learning Credits)

You cannot use TeleFile if you are claiming the student loan interest deduction. However, you can e-file by personal computer or by filing through an Authorized IRS e-file Provider. To learn more, refer to our Electronic Services information. For general information about TeleFile or e-file, refer to Tax Topic 255, TeleFile, or Tax Topic 252, Electronic Filing.

References:

• Tax Topic 255, TeleFile
• Tax Topic 252, Electronic Filing
• Electronic Services