The education loan interest deduction is designed to help make school less expensive for students in addition to their parents. Although student loan interest has become forever suspended since March 2020 as a result of COVID-19 pandemic, you may still manage to deduct interest paid in initial an element of the seasons on the 2020 tax return.

Who is entitled to the education loan interest deduction?

Any borrower just who files utilizing solitary, head of house, being qualified widow, or wedded submitting jointly position might be able to take education loan interest. Precisely the appropriate borrower who signals the mortgage records was eligible for the deduction. This basically means, moms and dads can’t take the deduction for a student loan taken out by their child, even if they’ve been putting some repayments.

Not all student loans qualify for the interest deduction, however the IRS lays out several requirements you must meet to take advantage of the deduction:

Manipulations to qualifying informative spending

Circumstances bring a bit more difficult should you made use of nontaxable funds regarding element of the informative expenses during the same course you got aside a student loan. Should you utilized grant money, education some help from an employer, or tax-free distributions from a Coverdell ESA, you must lessen your qualifying educational costs by same quantity. In the event that staying expenditures include lower than the education loan quantity for that duration, your can’t take the interest on that education loan. (more…)