Posted on | May 18, 2012
Paying a student loan can be very burdensome whether you are a college student trying to make ends meet or a parent who is helping out paying his child’s education. With the prevailing cost of interest and cost of living, true enough that many people who are on student loan borrowing are having a difficult time dealing with a huge indebtedness. As a way of helping parents and students, the government has declared a tax deduction on the interest you paid in a student loan. This simply means that you can claim the interest expense that you incurred in a student loan as a deduction to your current tax payable. Having this privilege is really a big help for a family who is struggling to make debt payments. Student loan interest deduction 2012 is subject to certain limitations though.
To request for a student loan interest tax deduction, you need to contact your lender. The lender will then send you the Form 1098-E from which you will enter the amount of interest you paid on the student loan for the current year.$2,500 is the maximum allowable amount of interest that you can claim as a tax deduction. However, there are certain limitations to this tax privilege. If your household income is $60,000 or $120,000 for married couples provided it is in a joint return, you can take advantage of the maximum allowable tax deduction of $2,500. If your income is between this bracket, over $60,000 but not more than $75,000, and or more than $120,000 but not more than $150,000 for married couples, you can avail of the deductible interest by using a prorated amount. If you have more than the specified bracket of incomes, then you are not eligible to receive the student loan interest deduction 2012.
The student loan interest deduction 2011 is available only until 2012 to all those qualified student loan borrowers. In 2013, only the interest paid in first 60 monthly payments are qualified to be claimed by the borrowers as a tax deduction. If the last full payment of your account falls within 2012 and you have been religiously paying your dues, then this is a great advantage. Otherwise, you will be sorry.