With tax season in full swing, I know a lot of us college students or recent college grads are wondering what this means in terms of our student loans. And if this is one of your first few times filing taxes, you may have that fear of messing them up. As a college student, it can be hard to keep track of funds — whether that be loans, scholarships, or even just paychecks from a part-time job. So the big question is: Can you write off student loans on your taxes? I’ll give you the short answer: yes, with discretion.
Besties, I know taxes can be very intimidating, OK? But you got this! It can be hard going through this process but it’s important to do your research and ask for help. We’re all in this together!
If President Joe Biden didn’t already cancel your student loan debt, you may want to listen up. According to the Internal Revenue Service (IRS), you can claim a deduction on student loan interest payments. The IRS website states, “You may deduct the lesser of $2,500 or the amount of interest you actually paid during the year.” This means if you paid interest on your student loans during the year, there’s a possibility you can get a deduction on your taxes.
You can only file a claim if these criteria apply to you: like I said earlier, you paid interest during the year; you’re legally obligated to pay interest on a student loan your filing status isn’t married filed separately; your modified adjusted gross income is less than a set specified amount, which is $90,000 for 2023, if you’re filing status is single; and you’re not being claimed as a dependent on someone else’s return (like your parents’ return).
According to the IRS, a qualified student loan is simply a loan taken out solely for education expenses that was for you, a spouse, or a dependent. Loans from a related person or qualified employer do not qualify as student loans under the IRS. Another thing to make sure when filing a deduction claim on your taxes is to make sure that your loans were disbursed during an academic period, such as a semester or year, and also that they went to an accredited institution — so, most likely in your case, your university.
When it comes to student loan deductions on your taxes, the expenses have to be for educational purposes. These expenses can include tuition, room and board, books, and any other necessary fees for school.
If you need a clearer sense of when you can deduct this interest, picture this — you obtained a student loan to attend your university and after graduating, your first loan payment was due. You make the loan payment. You’re not a dependent on any one else’s tax form so through this, you can deduct this interest payment on your taxes.
WIth that being said, it is possible to write off your student loans from your taxes, in a sense. Make sure when you’re filing to double check everything to make sure you qualify for a possible loan deduction. Happy tax season!