does
not actually claim that exemption), and if your modified adjusted gross
income (MAGI) is more than $80,000 ($160,000 if filing a joint return).
Additionally, you cannot claim the credit if you
were a nonresident alien for any part of the year and did not elect to be
treated as a resident alien for tax purposes. You cannot claim a
deduction for a credit that you or
anyone else claims an education credit for expenses of the student for whom
the qualified education expenses were paid and also you cannot claim
a credit for student-activity fees
and expenses for course-related books, supplies and equipment are included
in qualified education expenses only if the fees and expenses must be paid
to the institution as a condition of enrollment or attendance.
Generally, personal interest you pay, other than
certain mortgage interest, is not deductible on your tax return. However, if
your modified adjusted gross income (MAGI) is less than $75,000 ($150,000 if
filing a joint return), there is a special deduction allowed for paying
interest on a student loan (also known as an education loan) used for higher
education. Student loan interest is interest you paid during the year on a
qualified student loan. It includes both required and voluntary interest
payments.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. This deduction can reduce the amount of your income
subject to tax by up to $2,500.
The student loan interest deduction is taken as an
adjustment to income. This means you can claim this deduction even if you do
not itemize deductions on Form 1040's Schedule A.
The Qualified
Student Loan is a loan you
took out solely to pay qualified education expenses that werefor you, your spouse, or a person who was
your dependent when you took out the loan, paid
or incurred within a reasonable period of time before or after you took out
the loan and for education provided during an academic
period for an eligible student. However, loans
from a related person, a qualified
employer plan, and Qualified Education Expenses are
not qualified student loans.
For purposes of the student loan interest deduction, these
expenses are the total costs of attending an eligible educational
institution, including graduate school. They include amounts paid for
tuition and fees, room and board, books, supplies,
equipment and other necessary
expenses such as transportation.
The cost of room and board qualifies only to the
extent that it is not more than the greater of
the allowance for room and board, as determined by the eligible
educational institution, that was included in the cost of attendance (for
federal financial aid purposes) for a particular academic period and living
arrangement of the student, or
the actual amount charged if the student is residing
in housing owned or operated by the eligible educational institution.
If you are an employee and can itemize your
deductions, you may be able to claim a deduction for the expenses you pay
for your work-related education. Your deduction will be the amount by which
your qualifying work-related education expenses plus other job and certain
miscellaneous expenses is greater than 2% of your adjusted gross income. An
itemized deduction may reduce the amount of your income subject to tax.If you are self-employed, you deduct
your expenses for qualifying work-related education directly from your
self-employment income. This may reduce the amount of your income subject to
both income tax and self-employment tax.Your work-related education expenses may
also qualify you for other tax benefits, such as the tuition and fees
deduction and the lifetime learning credit. To claim a business deduction
for work-related education, you mustbe working,
itemize your deductions on
