How to claim student tax back
A) You’ve paid interest on your student loans (or on behalf of a dependent)
It’s no fun putting some of your hard-earned money toward paying off interest that’s accrued on your debt, but the good news is you could get a “student loan tax credit” for doing so. The more student debt you owe, the more interest you’re likely paying every time you make a payment – and that means the more you can deduct from your taxes. If you’re digging through the tax forms you got in the mail this year, keep an eye out for the Form 1098-E. This form from your student loan lender will let you know how much interest you’ve paid; you’ll use this to determine how much you can deduct when you file your taxes (up to $2,500 for single filers). If you didn’t get a Form 1098-E from your lender, it might mean you paid $600 or less in interest in the past year – but you can still take this deduction, even without the form.
Did you pay down interest that accrued on your student loans, while on an Income Based Repayment or Income Contingent Repayment plan?
Here’s some extra good news for those who have signed up for an Income Based Repayment or Income Contingent Repayment plan: not only is your monthly student loan repayment lower, you can still take the interest deduction mentioned above, too. According to IRS law, you’re allowed to deduct interest that you paid on qualified student loans regardless of your repayment plan. That’s a win-win in the short term. Just remember: if the federal government ends up forgiving some of your student loan debt due to Federal Student Loan Forgiveness Programs in the future, you’ll have to pay taxes on any amount that is forgiven.
Do you make less than $75,000 as a single filer ($150,000 for joint filers)?
To be eligible to deduct all or some of your student loan interest during tax time, you’ll need to have a
modified adjusted gross income of less than $75,000, or $150,000 if filing jointly. With the average post-college salary hovering around $45,000 annually, many recent college graduates will qualify.
B) You paid for tuition, fees and other education expenses for an undergraduate degree or continuing education
Are you still in school or did you just graduate with a four-year degree this past year? Thanks to the American Opportunity credit, you could qualify for a nice refund, If you paid for tuition, fees, books or other qualified education expenses and you attended school for at least half time for the tax year that you’re filing for, you could be able to take advantage of this credit for the first four years you attend school. The American Opportunity Tax Credit will cover 100 percent of the first $2,000 in qualified expenses and then 25 percent of expenses after that up to $2,500. If you’re not pursuing a degree but you spent money on job training or other qualified education, you’re still in luck: you may be able to apply for the Lifetime Learning credit. This is meant for folks that are continuing their education but not necessarily pursuing a degree. You can claim up to $2,000 per tax return with this credit. Keep in mind you can only claim one of the two credits listed above, not both.
Where and how can you claim these student loan tax credits and deductions?
Phew – that’s a lot of tax breaks to keep in mind! So just how do you file your taxes to take advantage of all that? IRS Form 8863 and Form 1040 for tax break and student loan interest deductions are going to be the two areas to pay attention to when you file your taxes. Of course, if you have a relatively straight-forward tax situation, you should be able to file your taxes through online software and receive the appropriate prompts to claim your deductions and your credits.
Good luck – and happy filing!Source: studentloanhero.com