During 2018 I paid the interest on my federal direct loans to keep it from rolling over into my principal. Can I claim that on my taxes since I personally paid it, or does that have to get reported on my parents’ taxes since they claim me as a dependent.
I think your parents have to take it. According the this IRS document, you can’t deduct if you are claimed as a dependent. https://www.irs.gov/taxtopics/tc456
@chardonMN yeah that’s what I thought which stinks brcause my parents AGI is too high to get the credit, but I actually paid it. Oh well.
yeah, that is a bummer! Good for you for staying on top of it, though.
I think you have to be in repayment to deduct the interest. So voluntary payments don’t count.
And as far as I know only the person responsible for paying back the loan (student for student loan), can claim the credit.
It is subject to income limits.
You should get a 1098 E from the school.
See Publication 970, chapter 4 for details
How much was your loan? If you provided more than 50% of your own support (loans count towards support, but not scholarships), then your parents can’t claim you as a dependent.
But if you weren’t required to repay your loan yet, I don’t think you can claim the loan interest deduction.
Did you get a 1098 E?
@mommdc yes I got a 1098E not from the school but from Nelnet, the loan servicing company. You don’t need to be in repayment to claim the interest. I take the federal direct loans each year so )5500 freshman year and $6500 sophomore year (I’m a junior). My parents provide way more than 50% of my support including the majority of my tuition and all of my rent and a meal plan plus give me $350/month for other expenses. The federal loans will me mine to pay and that’s why I am trying to stay on top of the interest accruing. Even if I can’t claim it now because I am a dependent it’s still worth it to pay the interest early, I think.
Neither. You can’t deduct the student loan interest because you are being claimed as a dependent on your parents’ tax return, and your parents can’t claim the student loan interest because they are not legally obligated to make the payments (there may also be other reasons your parents cannot claim the deduction on their return).
@BelknapPoint thanks. I’m assuming it’s stilll a good idea to pay it early even if I can’t claim the deduction. Right? I wasn’t doing it for the deduction, just to keep the interest from rolling into the principal.
It’s never a bad idea to pay off interest if you can.
You might be able to deduct interest down the road when you are no longer a dependent of your parents and if your income isn’t over the threshold.
I stand corrected, the tax topic 456 does say that voluntary payments are included.