TAX SEASON 2024
Can you claim a student loan interest deduction on your taxes in 2024?
Student loans got you down? The US tax code has some help: deduction of up to $2,500 in interest this tax season.
For many Americans, student loans are a heavy burden. But there’s a silver lining: the student loan interest deduction. This tax break allows you to deduct up to $2,500 of the interest you paid on qualified student loans in a tax year, reducing your taxable income and potentially lowering your tax bill.
Here’s how to claim this deduction.
Eligibility for the student loan interest deduction
The deduction applies to interest paid on federal and private student loans used for qualified higher education expenses for yourself, your spouse, or a dependent.
- You paid interest on a qualified student loan in tax year 2023;
- You're legally obligated to pay interest on a qualified student loan;
- Your filing status isn't married filing separately;
- Your MAGI is less than a specified amount which is set annually; and
- Neither you nor your spouse, if filing jointly, were claimed as dependents on someone else's return.
The deduction phases out based on your Modified Adjusted Gross Income (MAGI). The full deduction is available for single filers with a MAGI under $90,000 ($185,000 for married filing jointly). The deduction gets progressively smaller if the MAGI is $75,000 or more for single filers and $155,000 for married filers.
Claiming the deduction
The good news is you don’t need to itemise deductions to claim this benefit. It’s an “above-the-line” deduction, meaning you subtract it from your gross income before calculating your taxable income.
Here’s what you’ll need:
- Form 1098-E: Lenders typically send you a Form 1098-E by 31 January, showing the total student loan interest you paid in the previous year.
- Tax Filing Software or Forms: Most tax filing software will guide you through claiming the deduction. If filing by hand, you’ll need Form 1040 or 1040-SR and Schedule 1.
To maximise your tax deduction, ensure you have all your 1098-E forms from different lenders to claim the total interest paid. Check your income documents to determine your MAGI and see if you qualify for the full deduction. If you are married and both have student loans, consider filing jointly to maximise your deduction based on the combined MAGI.