Uncategorized Real Talk Series: My daughter needs to take out student loans. How will this affect our taxes? Read the Article Open Share Drawer Written by TurboTaxBlogTeam Published Jun 5, 2019 2 min read Q: My daughter needs to take out student loans. How will this affect our taxes? A: First, congratulations on your daughter attending college! Although going to college is an exciting and unforgettable opportunity, we all know some of the challenges that students and families can face when it comes to paying for college. Luckily for parents, student loans can actually help their tax situation. If you took out the loan for your daughter, are liable to pay it back, and you’re claiming your daughter as a dependent then you can deduct up to $2,500 in student loan interest. What is student loan interest? Student loan interest is interest paid during the year on a qualified loan for qualified higher education and includes required and voluntarily paid interest. So, how will you know if your daughter’s student loan interest is tax deductible? If you said yes to all of the below, then interest may be tax deductible: The student loan is qualified—basically, that the money was used to pay tuition and other qualified education expenses. You are legally obligated to pay the interest. Your filing status is not married filing separately. You or your spouse, if filing jointly, can’t be claimed as a dependent by someone else. Your daughter must be able to be claimed as a dependent and enrolled at least half-time in a program leading to a degree or other recognized credential. Your Modified Adjusted Gross Income (MAGI) is less than $80,000 (or $160,000 if you file jointly with your spouse). Each year, you can deduct up to $2,500 of student loan interest, provided you have paid that much. As a result, if you did not make any payments on your daughter’s student loans during the year you will not be able to deduct any student loan interest. If your daughter worked some last year and wants to file her taxes and claims herself then you would not be able to take the student loan interest deduction. It’s always helpful to have a conversation with your dependent to discuss who will take the dependent exemption and deduct education tax benefits like the student loan interest. If your income is more than the income threshold or your daughter would benefit from a bigger tax refund she may want to claim herself when she files her taxes and take the student loan interest deduction. You can find the total amount you paid in student loan interest on Form 1098-E, which you should receive from your lender by mail in January. Don’t worry about knowing these tax laws. TurboTax will ask you simple questions and give you the tax deductions and credits you deserve based on your answers. With TurboTax SmartLook you can also connect live via one-way video to a credentialed CPA or enrolled agent to get your toughest tax questions answered. Written by TurboTaxBlogTeam More from TurboTaxBlogTeam Los comentarios están cerrados. Browse Related Articles Planificación de Impuestos ¿Se te pasó la fecha límite para presentar tu declar… Planificación de Impuestos Mañana es la fecha límite para declarar impuestos: ¡… Planificación de Impuestos ¿Ya declaraste tus impuestos? Averigua qué registros … Trabajo por Cuenta Propia ¿Trabajas por cuenta propia? Revisa las fechas límite… Seguros Médicos ¿Cuándo se puede reclamar una deducción tributaria p… Reembolso de Impuestos Qué esperar cuando estas esperando… tu reembolso… Planificación de Impuestos Según el IRS, este año aumentaron los reembolsos de i… Ingresos e Inversiones Amigos con beneficios tributarios: ¿Trabajas desde cas… Deducciones y Créditos de Impuestos Maneras en que los cambios en tu vida pueden ahorrarte … Noticias TurboTax Cerrando la brecha de la educación financiera: Una mir…