MIME-Version: 1.0 Content-Location: file:///C:/6E8AA2D4/StudentLoanInterest.htm Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii" STUDENT LOAN INTEREST

STUDENT LOAN INTEREST

 

You may be able to deduct up to $2,500 for interest y= ou pay in 2006 on a qualified student loan. If your student loan is canceled, = you may not have to include any amount in income.

The deduction is claimed as an adjustment to income so you do not need to itemize your deductions on Schedule = A of Form 1040. However, you cann= ot claim the deduction if:

  1. Another taxpayer clai= ms an exemption for you as a dependent,
  2. Your filing status is= married filing separately, or
  3. You are not legally obligated to make payments on the loan.

A qualified student loan is a loan you took out solely to pay qualified higher education expenses. The expenses must have been: <= /p>

  1. For you, your spouse,= or a person who was your dependent when you took out the loan, <= /span>
  2. Paid or incurred with= in a reasonable time before or after you took out the loan, and =
  3. For education furnish= ed during an academic period when the recipient was an eligible student. =

Qualified higher education expenses are the costs of attending an eligible educational institution, including graduate school. T= he costs of attendance are determined by the eligible educational institution = and include tuition and fees, an allowance for room and board, and an allowance= for books, supplies, transportation and miscellaneous expenses.

Costs you incur have to be reduced by financial assistance received. 

The student must have been enrolled in a degree, certificate, or other program leading to a recognized educational credentia= l at an eligible educational institution and must have carried at least one half= of a normal full-time work-load for the course of study being pursued.

The deduction wi= ll start to phase out when modified AGI exceeds $50,000 ($100,000 if married filing jointly). You cannot take a student loan interest deduction if your modified AGI is $65,000 ($130,000 if you file a joint return) or more.

If you paid $600 or more of interest on a qualified student loan during the year, you will receive a Form 1098-E (Student Lo= an Interest Statement), from the financial institution, from a governmental unit (or any of its subsidiary agencies), from educational institutions, or= any other person to whom you had paid student loan interest of $600 or more in = the course of their trade or business.