Reduce Your Tax Payments by:Jakob Jelling
Reduce your tax payments by claiming an interest payment deduction.
If you are busy paying off your student loans, the last thing you want to do is to pay interest on the money that you're about to give right back to the government. Luckily, in a lot of cases you should be able to deduct the amount of interest that you paid on your student loans. Deducting interests on student loans is not very difficult to do as long as you make sure that you meet the requirements for claiming this particular deduction on your taxes.
First of all, you have to have the proper filing status - which in this case means that you can be of any filing status except for if you are married and still filing your taxes separately. There is no explanation given as to why this particular status is exempt, however, this is still important to take note of before you waste your time trying to fill out a deduction that you cannot claim.
The other thing that is necessary in order for you to claim that deduction is that you cannot have another person claim you as a dependent or a tax exemption on their own tax forms. For most people who have already graduated from college and are trying to pay off their student loans, this should not be too much trouble. However, you should still make sure that nobody in your life is still claiming you as a tax deduction.
Finally, you have actually pay the interest on your student loan before you can claim it as a deduction. This also only works if you are the only person who has an actual obligation to pay off the loan. Therefore, you will not be able to claim a deduction if you are paying interest on a loan that both you and your parents owe money on, or on a parent PLUS loan.
You can also claim interest as a deduction if you are paying off the interest on a student loan that is owed by your dependent. However, in this case you can only deduct the payment if you are actually the person who is obligated to pay off the loans. You also need to claim an exemption for that dependent on your tax return.
About the author
Jakob Jelling is the founder of http://www.cashbazar.com. Visit his website for the latest on personal finance, debt elimination, budgeting, credit cards and real estate. Indiana Supreme Court Discusses Proceedings Supplemental by:John D. Waller Decision Finance by:Don Whiting Facing Resentment From Unsuccessful Candidates by:Helen Wilkie Banks Finally Forced To Payout by:Scott James Successfully Obtaining a Small Business Loan by:Rebecca Game Santa: The Consummate Entrepreneur by:Tim Knox Why Have 2 To-Do Lists? by:Stuart Lockley With a Lease, The Devil Is In The Details by:Tim Knox Starting Up A New Business-How You Can Quickly and Easily Do a Break Even Analysis by:CORE Magazine Inheritance Taxes Explained by:Jakob Jelling Why Try Factoring? by:Henry Byers Time Management Tips For Professionals by:Dawn-Elise Snipes Affiliate Programs by:Pasi Kaarakainen