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How to Claim the Student Loan Deduction

how to claim student loans

You can use Form 1040 or Form 1040A to deduct student loan interest.

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If you've taken out student loans, Uncle Sam gives you a tax break as long as the loan qualifies. Knowing the qualifications can help you make better decisions when you take out the loan and not disqualify the loan. However, student loan interest is limited to $2,500 per year no matter how many loans you took out.

Tax Reporting

At the end of the year, you'll receive a Form 1098-E that shows you the amount of interest paid during the year in Box 1. When you file your income taxes, you have to use either Form 1040 or Form 1040A. On

either form, report your deduction as an adjustment income under "Student loan interest deduction." You don't have to itemize your deductions to write off the student loan interest.

Qualifying Loans

Whether a loan qualifies for the student loan interest deduction is determined at the time the loan is taken out. To qualify, the loan must be for yourself, your spouse or a person you claim as a dependent in the year you take out the loan. For example, if you took out a loan for your daughter and you claimed her as a dependent that year, you can continue to claim the interest each year until the loan is paid off. In addition, the entire loan must be used for qualifying expenses.

Qualifying Educational Expenses

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