Student Loan Borrowers During Tax Season

As a student loan borrower, there are several things you should know about the tax season:

1. Student loan interest may be tax deductible: If you paid interest on your student loans during the tax year, you may be able to deduct up to $2,500 of that interest on your tax return. This deduction is available whether you itemize your deductions or take the standard deduction.
2. Loan forgiveness may be taxable: If you have federal student loans that are forgiven, the amount forgiven may be taxable as income. This applies to most types of loan forgiveness, including public service loan forgiveness (PSLF) and teacher loan forgiveness. However, loan forgiveness due to death or disability is generally not taxable.
3. Private student loans may have different tax implications: Private student loans may have different tax implications than federal student loans. Be sure to read the terms of your loan agreement and consult with a tax professional if you have questions.
4. Know your repayment plan: If you are on an income-driven repayment plan, your monthly payments may be based on your income and family size. This can impact your taxes, as your monthly payment may change if your income changes. Be sure to understand the tax implications of your repayment plan and how it may impact your taxes.
5. Keep good records: Keep track of your loan payments and any interest you paid during the tax year. This will make it easier to claim the student loan interest deduction if you are eligible.
6. Look into tax credits: The American Opportunity Tax Credit and the Lifetime Learning Credit are two tax credits that may be available to help offset the cost of education expenses, such as tuition and fees.
7. Seek professional help: If you have questions or concerns about how your student loans may impact your taxes, consider consulting with Matthew Jennings, JD, MBA, EA, RFC®, CEP®, CES™, aka Tax King Matt.

Overall, understanding how your student loans can impact your taxes is important. Be sure to keep good records, understand your repayment plan and the tax implications, and seek professional help from Tax King Matt if needed.