Getting tax credits for your education expenses


Getting tax credits for your education expenses

by: Kim Suchek | .
. | .
published: February 21, 2013

Hello military community,

Following last week’s article tax filing tips for military personnel and their families, I will now briefly cover Deducting student loan interest from your taxes. Generally, personal interest you pay, other than certain mortgage interest, is NOT deductible on your tax return.

However, if your modified adjusted gross income (MAGI) is less than $75,000 ($150,000) if filing a joint return), there is a special deduction allowed for paying interest on a student loan (also known as an education loan) used for higher education. Student loan interest is interest you paid during the year on a qualified student loan. It includes both required and voluntary interest payments.

For most taxpayers, MAGI is the adjusted gross income as figured on their federal income tax return before subtracting any deduction for student loan interest. This deduction can reduce the amount of your income subject to tax by up to $2,500.

The student loan interest deduction is taken as an adjustment to income. This means you can claim this deduction even if you do not itemize deductions on Form 1040’s Schedule A.

Qualified Student Loan

This is a loan you took out solely to pay qualified education expenses (defined later) that were:

  • For you, your spouse, or a person who was your dependent when you took out the loan.
  • Paid or incurred within a reasonable period of time before or after you took out the loan.
  • For education provided during an academic period for an eligible student.

Loans from the following sources are NOT qualified student loans:

  • A related person.
  • A qualified employer plan.

Qualified Education Expenses

    For purposes of the student loan interest deduction, these expenses are the total costs of attending an eligible educational institution, including graduate school. They include amounts paid for the following items:

  • Tuition and fees.
  • Room and board.
  • Books, supplies and equipment.
  • Other necessary expenses (such as transportation).

The cost of room and board qualifies ONLY to the extent that it is not more than the greater amount of:

  • The allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student, or
  • The actual amount charged if the student is residing in housing owned or operated by the eligible educational institution.

As always, make sure you double check with a certified tax accountant before filing any claims. And with education assistance make sure you check into all the scholarships/grants that are available for service members and your families.

Blessing from my family to yours,

Kimberly Suchek

If you have any questions or concerns or would like to share a story or situation, contact me at and visit my website for updated information and other resources not listed in my book.