When filing their federal income tax return, students and former students who have paid interest on a qualified student loan may be eligible for a tax deduction for some or all of the interest.
To record the amount paid in interest, they just request Form 1098-E from the entity that receives loan payments. Some lenders handle loan servicing in-house, while others hire a third party.
What is Form 1098-E intended for?
Anyone who pays at least $600 in student loan interest should receive a 1098-E from their lender, and the papers are usually sent by the end of January. If you have outstanding loans with more than one supplier, you may receive multiple 1098-E forms. The $600 limit applies to all borrowers, regardless of the number of student loans obtained.
You must have paid interest on a qualified student loan in the tax year 2022 and be legally obligated to pay interest on a qualified student loan to be eligible for a student loan interest deduction. The aforementioned form can be used by taxpayers to calculate their student loan interest deduction.
They may be entitled to deduct up to 2,500 dollars in student loan interest from their taxable income. When your modified adjusted gross income (MAGI) exceeds the annual maximum for your filing status, the deduction is gradually reduced and eventually eliminated via phaseout.
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Employer Educational Assistance
Employer educational help is a tax benefit provided by some firms that allow employees to deduct up to $5,250 in employer-sponsored education assistance from their taxable income each year. This benefit can be used to cover qualified educational expenses such as tuition, fees, books, and supplies.
To qualify for employer educational assistance, the employer must have a written plan that meets the Internal Revenue Service’s criteria. (IRS). Education support must also be offered in accordance with a stated plan that does not favor highly compensated personnel.
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