How to Calculate Your Student Loan Interest Tax Deduction

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The scholar loan interest discount is a tax benefit that can help offset the costs of borrowing and repaying this debt. As they file their income taxes in 2020, borrowers can deduct the pastime they paid on scholar loans throughout the former year, saving up to $ 625 on their taxes .
however, not everyone will get the full value of the student loanword interest discount. Find out how much lower your taxable income could be if you claim your student loanword interest as a subtraction .
average student loan sake discount worth $ 188
Student loanword interest discount 2019 : High-income filers benefit the most
What is your student loanword interest deduction worth ?
Do you qualify for the student loan interest deduction ?

Average student loan interest deduction worth $188

Like other tax deductions, the student loan interest deduction helps you by reducing how much of your income is taxed .
In this case, your taxable income is lowered by the sum of scholar loanword interest you paid in 2019 — up to $ 2,500. It can lower your tax bill by deoxyadenosine monophosphate much as $ 625. And that could mean paying less in taxes or getting a bigger refund .
For scholar loanword borrowers who count on their tax refund to make end meet or get ahead on fiscal goals, it can be a huge avail .
however, few tax filers get the utmost $ 625 value of the student lend interest discount. here are some stats on the scholar loan pastime deduction, per 2019 congressional tax estimates :

  • 12.1 million Americans will be eligible to claim the student loan interest deduction on their return for the 2019 tax year.
  • The average dollar value of the student loan interest deduction is $188.

Student loan interest deduction 2019: High-income filers benefit the most

however, some filers get more than the modal, as you can see in the postpone below :

Income class Average deduction value
Below $10,000 $214
$10,000 to $20,000 $89
$20,000 to $30,000 $136
$30,000 to $40,000 $142
$40,000 to $50,000 $155
$50,000 to $75,000 $213
$75,000 to $100,000 $183
$100,000 to $200,000 $214
$200,000 and over $74

Filers who earn above $ 50,000 benefit the most from claiming the student loan interest deduction. And the highest average scholar loanword pastime subtraction ( $ 214 ) is claimed by those earning both more than $ 100,000 and less than $ 10,000 .
The fact that in most of the above cases, higher earners benefit the most from the student loan concern deduction is probable the leave of a copulate of factors. First, those who pay student lend interest and qualify for this scholar lend interest discount are more probable to have a college degree and earn a higher income .
additionally, low-income borrowers might pay less interest if they ’ re taking advantage of repayment options such as postponement and patience or income-driven repayment plans. These refund plans lower the payments borrowers make, sometimes to $ 0. If those borrowers pay little on student loans, they won ’ t have much scholar loan sake to claim.

Whatever your income level, if you paid student loan matter to last class, you should look into claiming a scholar loan concern tax write-off for 2019. If not, you could lose out on getting some of that money back .

What is your student loan interest deduction worth?

As you work to prepare your taxes, you might want to better understand the value of your student loan pastime deduction for 2019 .
The median respect of this tax profit is $ 188. But the prize of your student loan interest deduction will depend on the specifics of your situation. From how a lot interest you paid in the past year to the rate at which your income is taxed, your own scholar loan and tax details are keystone .
fortunately, our student loanword interest tax write-off calculator can promptly and easily estimate your personal savings if you claim this tax benefit. Using this joyride can give you a more accurate mind of what kind of tax refund you can expect to get back .

Do you qualify for the student loan interest deduction?

The IRS makes clear who can and can ’ triiodothyronine claim the scholar loanword concern discount. hera are some factors that affect whether you ’ re eligible to claim the scholar lend interest deduction in 2020 for the 2019 tax year :

  • Your income: This tax deduction is phased out at $85,000 modified adjusted gross income (MAGI) for single filers and $170,000 MAGI for filers who are married and filing jointly.
  • Filing status: You can’t claim the student loan interest deduction if you’re claimed as a dependent on someone else’s return or if you’re married but filing separately. What won’t matter is whether you’re taking a standard or itemized deduction. The student loan interest deduction is an “adjustment to income,” according to the IRS, and can be claimed either way.
  • Qualified student loan: You must have paid interest on a student loan that was initially borrowed to fund qualifying educational expenses. Both federal and private student loans can qualify, but student loans from a family member can not.
  • Student loan interest paid: You must have paid the interest on the qualified student loan during 2019, and it must have been on student loans you’re legally obligated to pay. Both prepaid student loan interest and loan origination fees can be claimed and deducted as interest paid.

The end point might be the trickiest since the person repaying a student loan international relations and security network ’ deoxythymidine monophosphate always the person who owns it. hera ’ sulfur when filers can and can ’ triiodothyronine call the scholar lend interest tax tax write-off :

  • Can’t claim: If a student loan is in your name but your parents are making the payments, your parents can’t claim the interest they paid since they’re not the legal owners of the loan.
  • Can’t claim: You can’t claim the student loan interest tax deduction if someone else, such as a parent, is making payments, even if your name is on the loan.
  • Can claim: Your parents can deduct interest they paid on student loans they cosigned with you since their names are on those loans.
  • Can claim: You can claim interest you paid on student loans that are in your name, whether they were taken out to pay for your education or someone else’s.

If you paid more than $ 600 in sake charges on your student debt in 2019, you ’ ll get a 1098-E outlining the student loanword sake you paid. Using the information from your 1098-E, you can claim your scholar loanword interest tax write-off for 2019 and get the full benefit you ’ re entitled to .
If you didn ’ thymine receive a 1098-E from your lender, don ’ t worry. You can still claim your concern, but you might have to do some extra legwork to determine how much scholar loan sake you paid :

  • Take a look at your account summary or payment statements for each student loan servicer you’re paying back to find out how much interest you paid in 2019.
  • If that information isn’t readily available, contact each student loan servicer and ask for this figure.

With this data in hand, you can claim your student lend concern discount when filing your 2019 tax retort. then comes the fun function : decide on the smartest way to spend your 2019 tax refund .
This web log does not provide tax or accounting advice. If you need tax and/or account advice, please contact an accountant directly.

Andrew Pentis contributed to this report .

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