Student Loan Interest Deduction
If your modified adjusted gross income (MAGI) is less than $80,000 (or $160,000 if filing a joint return), there is a special deduction allowed for paid interest on a student loan used for higher education. For most taxpayers, MAGI is the adjusted gross income as figured on their federal income tax return before subtracting any deduction for student loan interest.
Student Loan servicers are required to report payments during the tax year by issuing to borrowers the IRS Form 1098-E if the interest received from the borrower in the tax year was at least $600. You should consult your loan servicer if you did not received a 1098-E or if your interest was less than $600 but you would still like to use the deduction.
It is important to note that in order to qualify, the borrower must have paid interest on the qualifying loan. This deduction can reduce the amount of your income subject to tax for a maximum of $2,500. We encourage you to consult the IRS website for more information.