<p>Regarding a Plus Loan, is the interest on that tax dedcutible? Also, when does one start paying interest on a Plus Loan? Can it be paid off at any time (ie: can one borrow $$ and then decide to pay it off within a few months if they wanted to do so)?</p>
<p>Bumping this up.</p>
<p>If it’s anything like the sub/unsub loans to students, you can immediately start paying off the interest.</p>
<p>gfountain, thanks. Anyone know if interest for these loans is tax deductible?</p>
<p>I don’t have any direct experience with plus loans, but they do seem to fit the qualifications for student loan interest deductions according to the IRS, as long as you’re meeting the criteria (taken for a dependent student, at least half-time enrollment, etc.). And yes, I have read that Parent Plus loans can be repaid at any time without penalty.</p>
<p><a href=“http://www.irs.gov/pub/irs-pdf/p970.pdf[/url]”>http://www.irs.gov/pub/irs-pdf/p970.pdf</a></p>
<p>Thanks sk8rmom. I saw this too, but it did not refer to plus loans, so I was curious.</p>
<p>I don’t think it refers to any specific type of student loans, but both Plus lenders and finaid.org refer to the potential for interest tax deduction under their Parent Plus info, so I’d be pretty confident that it is.</p>
<p>I’ve taken the interest off my taxes on our plus loan the last few years. I also started paying on the interest (and some principle) as soon as I could. One was a mail-in payment, but another was online and I set up times to do it which made it much easier.</p>
<p>Thank you. I just showed this to my DH. I have not taken out a plus loan YET, but I asked DH to ask our accountant if this interest was deductible in our case. He said that this is “considered to be a consumer loan” and it is not. I thought that our accountant was incorrect, so I posted to this to inquire. BTW, DH just told me that he asked another accountant the same question and he also thought that it was not a deduction.</p>
<p>I don’t know if your accountant is just mistaken or you are otherwise not elligible for the deduction - please look at IRS Publication 970, available at the IRS.gov website. Plus loans qualify for the deduction as long as they are used to pay qualifying educational expenses - however, there are specific requirements to actually take the deduction. </p>
<ol>
<li> You cannot file as Married Filing Separately</li>
<li> The deduction “phases out”. If filing as single the AGI limit is $70,000 for a full deduction, with the deduction eliminated if AGI is greater than $75,000. The phase out is $140,000 to $150,000 for married couples filing jointly.</li>
<li> The deduction is limited to $2,500</li>
<li> You can not deduct student loan interest if you are taking the deduction for tuition and fees.</li>
<li> You can not take the deduction if you can be claimed as a dependent on another persons return.</li>
</ol>
<p>ChicagoBear, what does #4 mean?</p>
<p>Can you take the tuition tax credit, and how much is that now, AND a student plus loan deduction?</p>
<p>I scanned Publication 970 and you can take the deduction for tuition and fees along with the student loan interest deduction - assuming you qualify. If you want a good summary, look at appendix B of Publication 970 for a chart comparing the various credits and deductions and outlining eligibility.</p>
<p>One thing of note while I was looking at the publication. Be careful totalling eligible expenses. Amounts paid for costs that already are tax privileged can not be double counted. So for example, the tax free earnings from a 529 or Coverdell among other things are not deductible. (If $10,000 is contributed to a 529 and is now worth $13,000 and is withdrawn to pay tuition, there is no tax on the $3,000 of earnings. Therefore you can only count $10,000 as eligible costs for purposes of the tuition deduction.)</p>
<p>Thanks Chicago Bear.</p>