As a general rule of thumb, no, the entire sum of your payment is not deductible, you cannot claim the full amount. However there is a caveat: you can deduct the applicable interest of that particular student loan during that tax year, should you qualify.
The IRS allows for up to a $2,500 deduction of the interest that you pay. This particular deduction does not require itemization as it claimed as an adjustment to your overall income, which could help save you on extra paperwork.
Of course it’s important to see if you qualify for the deduction first, so let’s examine some of the requirements from the IRS in order to make a legal deduction:
-Interest paid on any qualifying loan during the tax period (again, up to that $2,500 limit)
-Legal obligation to pay interest on any qualifying student loan (in some cases this can be a spouse, a legal dependent, etc.)
-You and/or your legal spouse cannot be claimed by anyone else as a dependent
-You do not file as married but file taxes separately
-Your modified adjusted gross income is under a certain amount
The last part can be tricky depending on your situation. You need to make sure that in order to qualify, your modified adjusted gross income (also referred to as MAGI) is under $60,000, or $120,000 if you file jointly. If you happen to make over $60,000 of reportable income in a year but less than $75,000, you may be eligible for a partial deduction, rather than completely ineligible.
Remember that each year that you pay at least $600 worth of interest on your student loans, you will receive a 1098-E form that reports your total payments, so make sure to refer to this sheet when calculating your totals in order to get the maximum deduction possible.
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