Go to college, they said.
Take out loans to pay for it, they said.
You’ll land a great paying job that will take care of your debt in no time. Right?
Unfortunately, every year, many graduates learn that’s not necessarily the case. College debt has become a pretty big issue in the United States, syphoning off the funds of millennials and Gen X-ers.
But there is one minor “benefit” to student debt. You get a deduction on your taxes.
Well, for the Interest, Anyway
It would be really great if you could deduct every dollar you pay towards your loans. That would result in a pretty hefty tax return for some. However, that’s not quite how it works. Instead, you can deduct the money paid towards interest on your loans.
Considering the interest rates some private loans can have, this still turns out to be a decent amount of money for some.
Because of course there’s limitations.
You can only deduct up to $2500. Additionally, your gross income must be less than $80,000 (or $160,000, if there’s two of you).
Also, the loan you’re paying must have been taken out specifically for educational purposes. If you meet those requirements, you’ve got yourself a nice little deduction.
As Far as Taxes Go, It’s Pretty Simple
While there are additional rules and regulations, as long as you went to a recognized/accredited institute, and you don’t make too much money, you shouldn’t have any problems getting the deduction. Your loan provider(s) should supply you with the information you need when the end of the year comes around.
You should be able to download the proper forms from the lender’s website as well.
Get Your Taxes Done Right
Deductions are something you don’t want to miss out on. Otherwise, you’re paying the government money that should still be in your pocket. If you’re already paying for student loans, the last thing you want to miss out on are tax breaks.
Whether it’s personal taxes or small business accounting in Springfield, Ohio, the team at LWS can make sure your finances are handled properly. Contact us today.