How can student loans affect my taxes?
If you have student loans, there can be different impacts on your taxes depending on different factors. The most common impacts are if you’re paying interest on the loan (in which case you may be able to claim a deduction) or if the loans have been forgiven (in which case you may or may not owe taxes).
Can I claim a deduction on my student loans?
You may be able to deduct the interest you paid on your student loans. You do not need to itemize your deductions in order to claim them. The maximum interest you can report is $2,500.
All of the following apply:
Paid Interest: You paid interest on a qualified student loan in tax year 2022.
Obligated to Pay Interest: You're legally obligated to pay interest on a qualified student loan.
Filing Status: Your filing status isn't married filing separately.
Income: Your Modified AGI is less than a specified amount which is set annually. For your 2022 return, the amounts can be found below:
Modified AGI is between $70,000 and $85,000
Modified AGI is between $145,000 and $175,000 if you file a joint return.
You can’t claim the deduction if your Modified AGI is above either $85,000 or $175,000 if you file a joint return.
Dependency: Neither you (nor your spouse if filing jointly), can be claimed as dependents on someone else's return.
Please note that april Filer does not support claiming student loan interest deductions at this time.
Where can I find how much I paid in interest on my student loans?
If you paid $600 or more during the year, you should receive a Form 1098-E from your student loan provider which can typically be downloaded from their website. If you’re unsure of who your provider is, refer to the Department of Education for more information.
Note: There is currently a pause on student loan interest effective March 13, 2020 due to COVID-19. If the debt relief program is not extended as of June 30, 2023, payments will resume 60 days after.
Do I owe taxes on forgiven student loans?
Generally, the IRS considers most forgiven debt as taxable income. However, there are exceptions to this, such as certain forms of forgiven student loans. You can read more about the different IRS exceptions and considerations here.
Each state also has their own laws about how forgiven debt, including forgiven student loans, can or cannot be considered taxable income. You can check out your state’s laws to see what applies to your situation.
It’s also important to note that there is a difference between your debt being forgiven, cancelled, or discharged. These differences could potentially impact what taxes (if any) you owe. You can read more about the differences here. You may also want to keep an eye out for any developments relating to student loan forgiveness legislation.
This content is provided for informational purposes only and should not be construed as tax, legal, financial, or other professional advice. Rules and regulations vary by location and are subject to change, so please consult with an expert if you need specific advice.