Who can claim the student loan interest deduction?

Can You Claim the Deduction?

Generally, you can claim the deduction if all of the following requirements are met.

• Your filing status is any filing status except married filing separately.
• No one else is claiming an exemption for you on his or her tax return.
• You are legally obligated to pay interest on a qualified student loan.
• You paid interest on a qualified student loan.

Claiming an exemption for you.   Another taxpayer is claiming an exemption for you if he or she lists your name and other required information on his or her Form 1040 (or Form 1040A), line 6c, or Form 1040NR, line 7c.

Example 1.

During 2015, Josh paid $600 interest on his qualified student loan. Only he is legally obligated to make the payments. No one claimed an exemption for Josh for 2015. Assuming all other requirements are met, Josh can deduct the $600 of interest he paid on his 2015 Form 1040 or 1040A.

Example 2.

During 2015, Jo paid $1,100 interest on her qualified student loan. Only she is legally obligated to make the payments. Jo's parents claimed an exemption for her on their 2015 tax return. In this case, neither Jo nor her parents may deduct the student loan interest Jo paid in 2015.

Interest paid by others.   If you are the person legally obligated to make interest payments and someone else makes a payment of interest on your behalf, you are treated as receiving the payments from the other person and, in turn, paying the interest.

Example 1.

Darla obtained a qualified student loan to attend college. After Darla's graduation from college, she worked as an intern for a nonprofit organization. As part of the internship program, the nonprofit organization made an interest payment on behalf of Darla. This payment was treated as additional compensation and reported on her Form W-2, box 1. Assuming all other qualifications are met, Darla can deduct this payment of interest on her tax return.

Example 2.

Ethan obtained a qualified student loan to attend college. After graduating from college, the first monthly payment on his loan was due in December. As a gift, Ethan's mother made this payment for him. No one is claiming a dependency exemption for Ethan on his or her tax return. Assuming all other qualifications are met, Ethan can deduct this payment of interest on his tax return.