Tracy’s Tax Tips: Student Loan Deduction

Paying back your student loans? ?That could help you lower the amount of money you pay Uncle Sam on April 15th.

FOX Business Network’s Tracy Byrnes has details in this “Tracy’s Tax Tip”:

More good news: The Tax Relief Act of 2010 extended the student loan deduction through 2012.

I’m Tracy Byrnes with the FOX Business Network, here with Tracy’s Tax Tips.

So, you may be able to deduct up to $2,500 dollars of the interest you paid on student loans on your Federal income tax return. ?Now, the deduction is not limited to government-sponsored loans, but does not apply to loans made to students by family members. ?Sorry.

You are eligible to take the interest deduction if you paid interest on a student loan for you, your spouse or a person who was your dependent. ?Now, an eligible student is a student who was enrolled at least half-time in a program that led to a degree, certificate or other recognized educational credential.

So, the amount of your student loan deduction will start to be phased out once your modified adjusted gross income hits $55,000 as a single person and $110,000 for married, filing joint. ?Now, the loan has to be used for qualified expenditures that include undergrad and grad tuition and fees, room and board, books, supplies and equipment.