Luckily Congress passed a low that allows you to deduct the interest paid on your student loan, up to $2,500.
Actually qualifying for the interest deduction is a little more complex. But my first question to determining eligibility on claiming interest on student loans is as follows:
“Who is obligated to repay the student loan?”
Essentially, you can deduct interest on student loans if you are legally required to repay the debt.
While there are a couple more rules on student loan interest deduction, I want to keep it basic and answer a reader’s question.
In other words, a mom can’t deduct interest for her son’s Stafford Federal Student Loan even though she is paying the bill.
Additional information is found in IRS Publication 970 – Tax Benefits for Education.