student loans

Getting credit for student loan payments

George SaenzDear Tax Talk,
I have been paying around $100 a month for three years for my daughter's student loan. I co-signed the loan for her, not knowing the consequences, of course. And every year, the Internal Revenue Service gives her the credit for making these payments.

Given I am the co-signer on this loan and I have been making the student loan payments, not her, why doesn't the IRS give me the credit at the end of the year for making the payments? I can't find an answer to this question anywhere, and trust me, I've looked.
-- Corrine

Dear Corrine,
The problem isn't with the IRS. The problem is with the lender. You need to let the lender know that you are making the payments and that the 1098-E reporting the interest to IRS should be issued in your name. An individual can claim an annual deduction for interest paid on a student loan. The deduction is an adjustment to gross income, which means you still get the benefit even if you do not otherwise itemize deductions.

Generally, you can claim the interest deduction for student loan payments if all of the following requirements are met.

  • Your filing status is any filing status except married filing separately.
  • No one else is claiming an exemption for you on his or her tax return.
  • You are legally obligated to pay interest on a qualified student loan.
  • You paid interest on a qualified student loan.

In addition, your daughter must have been your dependent when you took out the loan.

Ask the adviser

To ask a question on Tax Talk, go to the "Ask the Experts" page and select "Taxes" as the topic. Read more Tax Talk columns.

To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Taxpayers should seek professional advice based on their particular circumstances.

Bankrate's content, including the guidance of its advice-and-expert columns and this website, is intended only to assist you with financial decisions. The content is broad in scope and does not consider your personal financial situation. Bankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategy. Please remember that your use of this website is governed by Bankrate's Terms of Use.

advertisement

Show Bankrate's community sharing policy
          Connect with us
advertisement
FRUGAL NEWSLETTER

Discover new ways to cut costs and save more every day. Reduce your spending, not life’s pleasures. Delivered weekly.

advertisement
Partner Center
advertisement

Connect with us