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How Do Student Loans Affect My Taxes? | Layton & Stacey Smith
You took out some student loans, and now you’re wondering how they’ll affect your taxes. Will you receive a credit for them? Can student loans change your refund amount?
The only way to find out is by listening to this episode, where we’ll tell you everything you need to know about student loans and taxes. Also, don’t forget to grab your favorite cigar and drink!
Student Loan: What You Need to Know
You do not include the full payment amounts on your taxes—only the interest amount is deductible.
You can also deduct up to $2,500 of student loan interest. However, this deduction depends on your income.
Individuals with a gross income over $85,000 and couples with a combined income over $125,000 are not eligible for the deduction.
Public Loan Forgiveness Program
If you’re working in public service, you may be able to apply for loan forgiveness.
The forgiven amount is not taxable by the federal government, but it may be taxable by specific states.
Defaulting on Student Loans
Can defaulted student loans affect your taxes? Unfortunately, while there are no direct tax implications for defaulting, the IRS becomes a collection agency. This means any refunds you receive can be taken to pay off your defaulted loans.
To fix this situation, you’ll need to enter a repayment plan to get your student loans out of default.
“Knowledge is power and it’s helpful to have these little tax nuggets of wisdom.” - Stacey Hoffman Smith
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By Layton Smith and Stacey Hoffler SmithYou took out some student loans, and now you’re wondering how they’ll affect your taxes. Will you receive a credit for them? Can student loans change your refund amount?
The only way to find out is by listening to this episode, where we’ll tell you everything you need to know about student loans and taxes. Also, don’t forget to grab your favorite cigar and drink!
Student Loan: What You Need to Know
You do not include the full payment amounts on your taxes—only the interest amount is deductible.
You can also deduct up to $2,500 of student loan interest. However, this deduction depends on your income.
Individuals with a gross income over $85,000 and couples with a combined income over $125,000 are not eligible for the deduction.
Public Loan Forgiveness Program
If you’re working in public service, you may be able to apply for loan forgiveness.
The forgiven amount is not taxable by the federal government, but it may be taxable by specific states.
Defaulting on Student Loans
Can defaulted student loans affect your taxes? Unfortunately, while there are no direct tax implications for defaulting, the IRS becomes a collection agency. This means any refunds you receive can be taken to pay off your defaulted loans.
To fix this situation, you’ll need to enter a repayment plan to get your student loans out of default.
“Knowledge is power and it’s helpful to have these little tax nuggets of wisdom.” - Stacey Hoffman Smith