Deducting Student Loan Interest

In 2006, you could deduct up to $2,500 of interest paid on student loans covering qualified education expenses, whether you took the standard deduction or itemized deductions. However, this only applied to single filers with modified adjusted gross incomes (MAGIs) under $50,000 and joint filers with MAGIs under $105,000. Single filers with MAGIs less than $65,000 and joint filers with MAGIs less than $135,000 qualified for partial deductions.

Before tax year 2002, only interest payments made within the first 60 months of loan repayment qualified for the deduction, but the IRS has now eliminated this provision.

Emochila: CPA Websites