What are the rules for deducting student-loan interest on my tax return?
Up to $2,500 in student-loan interest can be tax-deductible in 2013 if your modified adjusted gross income is less than $60,000 if you’re single or $125,000 if you are married and file a joint return. The deduction is phased out at higher income levels, disappearing completely if you earn more than $75,000 if single or $155,000 if filing a joint return.
You can take the deduction regardless of whether you itemize deductions. Even if your parents pay the interest on a loan for which you are liable, you can deduct the interest, as long as you are not claimed as a dependent on your parents’ tax return.
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For more information about the tax rules, see IRS Publication 970, Tax Benefits for Education. And for more information about student loans, see our Student Loan Special Report.
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