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State Income Tax Rate Comparisons

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State Income Tax Rate Comparisons

State income tax rate comparisons Some employees may be able to deduct certain work-related expenses. The following facts from the IRS can help you determine which expenses are deductible as an employee business expense. You must be itemizing deductions on IRS Schedule A to qualify. State income tax rate comparisons Expenses that qualify for an itemized deduction generally include: State income tax rate comparisons Business travel away from home State income tax rate comparisons Business use of your car State income tax rate comparisons Business meals and entertainment State income tax rate comparisons Travel State income tax rate comparisons Use of your home State income tax rate comparisons Education State income tax rate comparisons Supplies State income tax rate comparisons Tools State income tax rate comparisons Miscellaneous expenses State income tax rate comparisons You must keep records to prove the business expenses you deduct. For general information on recordkeeping, see IRS Publication 552, Recordkeeping for Individuals available on this website, or by calling 1-800-TAX-FORM (800-829-3676). State income tax rate comparisons If your employer reimburses you under an accountable plan, you should not include the payments in your gross income, and you may not deduct any of the reimbursed amounts. State income tax rate comparisons An accountable plan must meet three requirements: State income tax rate comparisons You must have paid or incurred expenses that are deductible while performing services as an employee. State income tax rate comparisons State income tax rate comparisons You must adequately account to your employer for these expenses within a reasonable time period. State income tax rate comparisons State income tax rate comparisons You must return any excess reimbursement or allowance within a reasonable time period. State income tax rate comparisons If the plan under which you are reimbursed by your employer is non-accountable, the payments you receive should be included in the wages shown on your Form W-2. You must report the income and itemize your deductions to deduct these expenses. State income tax rate comparisons Generally, you report unreimbursed expenses on IRS Form 2106 or IRS Form 2106-EZ and attach it to Form 1040. Deductible expenses are then reported on IRS Schedule A, as a miscellaneous itemized deduction subject to a rule that limits your employee business expenses deduction to the amount that exceeds 2 percent of your adjusted gross income. State income tax rate comparisons For more information see IRS Publication 529, Miscellaneous Deductions, which is available on this website, or by calling 1-800-TAX-FORM (800-829-3676). State income tax rate comparisons
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The State Income Tax Rate Comparisons

State income tax rate comparisons 4. State income tax rate comparisons   Student Loan Interest Deduction Table of Contents Introduction Student Loan Interest DefinedQualified Student Loan Qualified Education Expenses Include As Interest Do Not Include As Interest When Must Interest Be Paid Can You Claim the DeductionNo Double Benefit Allowed Figuring the DeductionEffect of the Amount of Your Income on the Amount of Your Deduction Which Worksheet To Use Claiming the Deduction Introduction Generally, personal interest you pay, other than certain mortgage interest, is not deductible on your tax return. State income tax rate comparisons However, if your modified adjusted gross income (MAGI) is less than $75,000 ($155,000 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. State income tax rate comparisons 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. State income tax rate comparisons This deduction can reduce the amount of your income subject to tax by up to $2,500 in 2013. State income tax rate comparisons The student loan interest deduction is taken as an adjustment to income. State income tax rate comparisons This means you can claim this deduction even if you do not itemize deductions on Schedule A (Form 1040). State income tax rate comparisons This chapter explains: What type of loan interest you can deduct, Whether you can claim the deduction, What expenses you must have paid with the student loan, Who is an eligible student, How to figure the deduction, and How to claim the deduction. State income tax rate comparisons Table 4-1. State income tax rate comparisons Student Loan Interest Deduction at a Glance This table summarizes the features of the student loan interest deduction. State income tax rate comparisons Do not rely on this table alone. State income tax rate comparisons Refer to the text for complete details. State income tax rate comparisons Feature   Description Maximum benefit   You can reduce your income subject to tax by up to $2,500. State income tax rate comparisons Loan qualifications   Your student loan: •must have been taken out solely to pay qualified education expenses, and •cannot be from a related person or made under a qualified employer plan. State income tax rate comparisons Student qualifications   The student must be: •you, your spouse, or your dependent, and  •enrolled at least half-time in a degree program. State income tax rate comparisons Time limit on deduction   You can deduct interest paid during the remaining period of your student loan. State income tax rate comparisons Limit on modified adjusted gross income (MAGI)   $155,000 if married filing a joint return; $75,000 if single, head of household, or qualifying widow(er). State income tax rate comparisons Student Loan Interest Defined Student loan interest is interest you paid during the year on a qualified student loan. State income tax rate comparisons It includes both required and voluntary interest payments. State income tax rate comparisons 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, and For education provided during an academic period for an eligible student. State income tax rate comparisons Loans from the following sources are not qualified student loans. State income tax rate comparisons A related person. State income tax rate comparisons A qualified employer plan. State income tax rate comparisons Your dependent. State income tax rate comparisons   Generally, your dependent is someone who is either a: Qualifying child, or Qualifying relative. State income tax rate comparisons You can find more information about dependents in Publication 501. State income tax rate comparisons Exceptions. State income tax rate comparisons   For purposes of the student loan interest deduction, there are the following exceptions to the general rules for dependents. State income tax rate comparisons An individual can be your dependent even if you are the dependent of another taxpayer. State income tax rate comparisons An individual can be your dependent even if the individual files a joint return with a spouse. State income tax rate comparisons An individual can be your dependent even if the individual had gross income for the year that was equal to or more than the exemption amount for the year ($3,900 for 2013). State income tax rate comparisons Reasonable period of time. State income tax rate comparisons   Qualified education expenses are treated as paid or incurred within a reasonable period of time before or after you take out the loan if they are paid with the proceeds of student loans that are part of a federal postsecondary education loan program. State income tax rate comparisons   Even if not paid with the proceeds of that type of loan, the expenses are treated as paid or incurred within a reasonable period of time if both of the following requirements are met. State income tax rate comparisons The expenses relate to a specific academic period, and The loan proceeds are disbursed within a period that begins 90 days before the start of that academic period and ends 90 days after the end of that academic period. State income tax rate comparisons   If neither of the above situations applies, the reasonable period of time usually is determined based on all the relevant facts and circumstances. State income tax rate comparisons Academic period. State income tax rate comparisons   An academic period includes a semester, trimester, quarter, or other period of study (such as a summer school session) as reasonably determined by an educational institution. State income tax rate comparisons In the case of an educational institution that uses credit hours or clock hours and does not have academic terms, each payment period can be treated as an academic period. State income tax rate comparisons Eligible student. State income tax rate comparisons   This is a student who was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential. State income tax rate comparisons Enrolled at least half-time. State income tax rate comparisons   A student was enrolled at least half-time if the student was taking at least half the normal full-time work load for his or her course of study. State income tax rate comparisons   The standard for what is half of the normal full-time work load is determined by each eligible educational institution. State income tax rate comparisons However, the standard may not be lower than any of those established by the U. State income tax rate comparisons S. State income tax rate comparisons Department of Education under the Higher Education Act of 1965. State income tax rate comparisons Related person. State income tax rate comparisons   You cannot deduct interest on a loan you get from a related person. State income tax rate comparisons Related persons include: Your spouse, Your brothers and sisters, Your half brothers and half sisters, Your ancestors (parents, grandparents, etc. State income tax rate comparisons ), Your lineal descendants (children, grandchildren, etc. State income tax rate comparisons ), and Certain corporations, partnerships, trusts, and exempt organizations. State income tax rate comparisons Qualified employer plan. State income tax rate comparisons   You cannot deduct interest on a loan made under a qualified employer plan or under a contract purchased under such a plan. State income tax rate comparisons 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. State income tax rate comparisons They include amounts paid for the following items. State income tax rate comparisons Tuition and fees. State income tax rate comparisons Room and board. State income tax rate comparisons Books, supplies, and equipment. State income tax rate comparisons Other necessary expenses (such as transportation). State income tax rate comparisons The cost of room and board qualifies only to the extent that it is not more than the greater 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. State income tax rate comparisons Eligible educational institution. State income tax rate comparisons   An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U. State income tax rate comparisons S. State income tax rate comparisons Department of Education. State income tax rate comparisons It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. State income tax rate comparisons   Certain educational institutions located outside the United States also participate in the U. State income tax rate comparisons S. State income tax rate comparisons Department of Education's Federal Student Aid (FSA) programs. State income tax rate comparisons   For purposes of the student loan interest deduction, an eligible educational institution also includes an institution conducting an internship or residency program leading to a degree or certificate from an institution of higher education, a hospital, or a health care facility that offers postgraduate training. State income tax rate comparisons   An educational institution must meet the above criteria only during the academic period(s) for which the student loan was incurred. State income tax rate comparisons The deductibility of interest on the loan is not affected by the institution's subsequent loss of eligibility. State income tax rate comparisons    The educational institution should be able to tell you if it is an eligible educational institution. State income tax rate comparisons Adjustments to Qualified Education Expenses You must reduce your qualified education expenses by the total amount paid for them with the following tax-free items. State income tax rate comparisons Employer-provided educational assistance. State income tax rate comparisons See chapter 11, Employer-Provided Educational Assistance . State income tax rate comparisons Tax-free distribution of earnings from a Coverdell education savings account (ESA). State income tax rate comparisons See Tax-Free Distributions in chapter 7, Coverdell Education Savings Account. State income tax rate comparisons Tax-free distribution of earnings from a qualified tuition program (QTP). State income tax rate comparisons See Figuring the Taxable Portion of a Distribution in chapter 8, Qualified Tuition Program. State income tax rate comparisons U. State income tax rate comparisons S. State income tax rate comparisons savings bond interest that you exclude from income because it is used to pay qualified education expenses. State income tax rate comparisons See chapter 10, Education Savings Bond Program . State income tax rate comparisons The tax-free part of scholarships and fellowships. State income tax rate comparisons See Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. State income tax rate comparisons Veterans' educational assistance. State income tax rate comparisons See Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. State income tax rate comparisons Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. State income tax rate comparisons Include As Interest In addition to simple interest on the loan, if all other requirements are met, the items discussed below can be student loan interest. State income tax rate comparisons Loan origination fee. State income tax rate comparisons   In general, this is a one-time fee charged by the lender when a loan is made. State income tax rate comparisons To be deductible as interest, a loan origination fee must be for the use of money rather than for property or services (such as commitment fees or processing costs) provided by the lender. State income tax rate comparisons A loan origination fee treated as interest accrues over the term of the loan. State income tax rate comparisons   Loan origination fees were not required to be reported on Form 1098-E, Student Loan Interest Statement, for loans made before September 1, 2004. State income tax rate comparisons If loan origination fees are not included in the amount reported on your Form 1098-E, you can use any reasonable method to allocate the loan origination fees over the term of the loan. State income tax rate comparisons The method shown in the example below allocates equal portions of the loan origination fee to each payment required under the terms of the loan. State income tax rate comparisons A method that results in the double deduction of the same portion of a loan origination fee would not be reasonable. State income tax rate comparisons Example. State income tax rate comparisons In August 2004, Bill took out a student loan for $16,000 to pay the tuition for his senior year of college. State income tax rate comparisons The lender charged a 3% loan origination fee ($480) that was withheld from the funds Bill received. State income tax rate comparisons Bill began making payments on his student loan in 2013. State income tax rate comparisons Because the loan origination fee was not included in his 2013 Form 1098-E, Bill can use any reasonable method to allocate that fee over the term of the loan. State income tax rate comparisons Bill's loan is payable in 120 equal monthly payments. State income tax rate comparisons He allocates the $480 fee equally over the total number of payments ($480 ÷ 120 months = $4 per month). State income tax rate comparisons Bill made 7 payments in 2013, so he paid $28 ($4 × 7) of interest attributable to the loan origination fee. State income tax rate comparisons To determine his student loan interest deduction, he will add the $28 to the amount of other interest reported to him on Form 1098-E. State income tax rate comparisons Capitalized interest. State income tax rate comparisons   This is unpaid interest on a student loan that is added by the lender to the outstanding principal balance of the loan. State income tax rate comparisons Capitalized interest is treated as interest for tax purposes and is deductible as payments of principal are made on the loan. State income tax rate comparisons No deduction for capitalized interest is allowed in a year in which no loan payments were made. State income tax rate comparisons Interest on revolving lines of credit. State income tax rate comparisons   This interest, which includes interest on credit card debt, is student loan interest if the borrower uses the line of credit (credit card) only to pay qualified education expenses. State income tax rate comparisons See Qualified Education Expenses , earlier. State income tax rate comparisons Interest on refinanced student loans. State income tax rate comparisons   This includes interest on both: Consolidated loans—loans used to refinance more than one student loan of the same borrower, and Collapsed loans—two or more loans of the same borrower that are treated by both the lender and the borrower as one loan. State income tax rate comparisons    If you refinance a qualified student loan for more than your original loan and you use the additional amount for any purpose other than qualified education expenses, you cannot deduct any interest paid on the refinanced loan. State income tax rate comparisons Voluntary interest payments. State income tax rate comparisons   These are payments made on a qualified student loan during a period when interest payments are not required, such as when the borrower has been granted a deferment or the loan has not yet entered repayment status. State income tax rate comparisons Example. State income tax rate comparisons The payments on Roger's student loan were scheduled to begin in June 2012, 6 months after he graduated from college. State income tax rate comparisons He began making payments as required. State income tax rate comparisons In September 2013, Roger enrolled in graduate school on a full-time basis. State income tax rate comparisons He applied for and was granted deferment of his loan payments while in graduate school. State income tax rate comparisons Wanting to pay down his student loan as much as possible, he made loan payments in October and November 2013. State income tax rate comparisons Even though these were voluntary (not required) payments, Roger can deduct the interest paid in October and November. State income tax rate comparisons Allocating Payments Between Interest and Principal The allocation of payments between interest and principal for tax purposes might not be the same as the allocation shown on the Form 1098-E or other statement you receive from the lender or loan servicer. State income tax rate comparisons To make the allocation for tax purposes, a payment generally applies first to stated interest that remains unpaid as of the date the payment is due, second to any loan origination fees allocable to the payment, third to any capitalized interest that remains unpaid as of the date the payment is due, and fourth to the outstanding principal. State income tax rate comparisons Example. State income tax rate comparisons In August 2012, Peg took out a $10,000 student loan to pay the tuition for her senior year of college. State income tax rate comparisons The lender charged a 3% loan origination fee ($300) that was withheld from the funds Peg received. State income tax rate comparisons The interest (5% simple) on this loan accrued while she completed her senior year and for 6 months after she graduated. State income tax rate comparisons At the end of that period, the lender determined the amount to be repaid by capitalizing all accrued but unpaid interest ($625 interest accrued from August 2012 through October 2013) and adding it to the outstanding principal balance of the loan. State income tax rate comparisons The loan is payable over 60 months, with a payment of $200. State income tax rate comparisons 51 due on the first of each month, beginning November 2013. State income tax rate comparisons Peg did not receive a Form 1098-E for 2013 from her lender because the amount of interest she paid did not require the lender to issue an information return. State income tax rate comparisons However, she did receive an account statement from the lender that showed the following 2013 payments on her outstanding loan of $10,625 ($10,000 principal + $625 accrued but unpaid interest). State income tax rate comparisons Payment Date   Payment   Stated Interest   Principal November 2013   $200. State income tax rate comparisons 51   $44. State income tax rate comparisons 27   $156. State income tax rate comparisons 24 December 2013   $200. State income tax rate comparisons 51   $43. State income tax rate comparisons 62   $156. State income tax rate comparisons 89 Totals   $401. State income tax rate comparisons 02   $87. State income tax rate comparisons 89   $313. State income tax rate comparisons 13 To determine the amount of interest that could be deducted on the loan for 2013, Peg starts with the total amount of stated interest she paid, $87. State income tax rate comparisons 89. State income tax rate comparisons Next, she allocates the loan origination fee over the term of the loan ($300 ÷ 60 months = $5 per month). State income tax rate comparisons A total of $10 ($5 of each of the two principal payments) should be treated as interest for tax purposes. State income tax rate comparisons Peg then applies the unpaid capitalized interest ($625) to the two principal payments in the order in which they were made, and determines that the remaining amount of principal of both payments is treated as interest for tax purposes. State income tax rate comparisons Assuming that Peg qualifies to take the student loan interest deduction, she can deduct $401. State income tax rate comparisons 02 ($87. State income tax rate comparisons 89 + $10 + $303. State income tax rate comparisons 13). State income tax rate comparisons For 2014, Peg will continue to allocate $5 of the loan origination fee to the principal portion of each monthly payment she makes and treat that amount as interest for tax purposes. State income tax rate comparisons She also will apply the remaining amount of capitalized interest ($625 − $303. State income tax rate comparisons 13 = $321. State income tax rate comparisons 87) to the principal payments in the order in which they are made until the balance is zero, and treat those amounts as interest for tax purposes. State income tax rate comparisons Do Not Include As Interest You cannot claim a student loan interest deduction for any of the following items. State income tax rate comparisons Interest you paid on a loan if, under the terms of the loan, you are not legally obligated to make interest payments. State income tax rate comparisons Loan origination fees that are payments for property or services provided by the lender, such as commitment fees or processing costs. State income tax rate comparisons Interest you paid on a loan to the extent payments were made through your participation in the National Health Service Corps Loan Repayment Program (the “NHSC Loan Repayment Program”) or certain other loan repayment assistance programs. State income tax rate comparisons For more information, see Student Loan Repayment Assistance in chapter 5, Student Loan Cancellations and Repayment Assistance. State income tax rate comparisons When Must Interest Be Paid You can deduct all interest you paid during the year on your student loan, including voluntary payments, until the loan is paid off. State income tax rate comparisons Can You Claim the Deduction Generally, you can claim the deduction if all of the following requirements are met. State income tax rate comparisons Your filing status is any filing status except married filing separately. State income tax rate comparisons No one else is claiming an exemption for you on his or her tax return. State income tax rate comparisons You are legally obligated to pay interest on a qualified student loan. State income tax rate comparisons You paid interest on a qualified student loan. State income tax rate comparisons Claiming an exemption for you. State income tax rate comparisons   Another taxpayer is claiming an exemption for you if he or she lists your name and other required information on his or her Form 1040 (or Form 1040A), line 6c, or Form 1040NR, line 7c. State income tax rate comparisons Example 1. State income tax rate comparisons During 2013, Josh paid $600 interest on his qualified student loan. State income tax rate comparisons Only he is legally obligated to make the payments. State income tax rate comparisons No one claimed an exemption for Josh for 2013. State income tax rate comparisons Assuming all other requirements are met, Josh can deduct the $600 of interest he paid on his 2013 Form 1040 or 1040A. State income tax rate comparisons Example 2. State income tax rate comparisons During 2013, Jo paid $1,100 interest on her qualified student loan. State income tax rate comparisons Only she is legally obligated to make the payments. State income tax rate comparisons Jo's parents claimed an exemption for her on their 2013 tax return. State income tax rate comparisons In this case, neither Jo nor her parents may deduct the student loan interest Jo paid in 2013. State income tax rate comparisons Interest paid by others. State income tax rate comparisons   If you are the person legally obligated to make interest payments and someone else makes a payment of interest on your behalf, you are treated as receiving the payments from the other person and, in turn, paying the interest. State income tax rate comparisons Example 1. State income tax rate comparisons Darla obtained a qualified student loan to attend college. State income tax rate comparisons After Darla's graduation from college, she worked as an intern for a nonprofit organization. State income tax rate comparisons As part of the internship program, the nonprofit organization made an interest payment on behalf of Darla. State income tax rate comparisons This payment was treated as additional compensation and reported in box 1 of her Form W-2. State income tax rate comparisons Assuming all other qualifications are met, Darla can deduct this payment of interest on her tax return. State income tax rate comparisons Example 2. State income tax rate comparisons Ethan obtained a qualified student loan to attend college. State income tax rate comparisons After graduating from college, the first monthly payment on his loan was due in December. State income tax rate comparisons As a gift, Ethan's mother made this payment for him. State income tax rate comparisons No one is claiming a dependency exemption for Ethan on his or her tax return. State income tax rate comparisons Assuming all other qualifications are met, Ethan can deduct this payment of interest on his tax return. State income tax rate comparisons No Double Benefit Allowed You cannot deduct as interest on a student loan any amount that is an allowable deduction under any other provision of the tax law (for example, as home mortgage interest). State income tax rate comparisons Figuring the Deduction Your student loan interest deduction for 2013 is generally the smaller of: $2,500, or The interest you paid in 2013. State income tax rate comparisons However, the amount determined above may be gradually reduced (phased out) or eliminated based on your filing status and MAGI as explained below. State income tax rate comparisons You can use Worksheet 4-1. State income tax rate comparisons Student Loan Interest Deduction Worksheet (at the end of this chapter) to figure both your MAGI and your deduction. State income tax rate comparisons Form 1098-E. State income tax rate comparisons   To help you figure your student loan interest deduction, you should receive Form 1098-E. State income tax rate comparisons Generally, an institution (such as a bank or governmental agency) that received interest payments of $600 or more during 2013 on one or more qualified student loans must send Form 1098-E (or acceptable substitute) to each borrower by January 31, 2014. State income tax rate comparisons   For qualified student loans taken out before September 1, 2004, the institution is required to include on Form 1098-E only payments of stated interest. State income tax rate comparisons Other interest payments, such as certain loan origination fees and capitalized interest, may not appear on the form you receive. State income tax rate comparisons However, if you pay qualifying interest that is not included on Form 1098-E, you can also deduct those amounts. State income tax rate comparisons See Allocating Payments Between Interest and Principal , earlier. State income tax rate comparisons    The lender may ask for a completed Form W-9S, or similar statement to obtain the borrower's name, address, and taxpayer identification number. State income tax rate comparisons The form may also be used by the borrower to certify that the student loan was incurred solely to pay for qualified education expenses. State income tax rate comparisons Effect of the Amount of Your Income on the Amount of Your Deduction The amount of your student loan interest deduction is phased out (gradually reduced) if your MAGI is between $60,000 and $75,000 ($125,000 and $155,000 if you file a joint return). State income tax rate comparisons You cannot take a student loan interest deduction if your MAGI is $75,000 or more ($155,000 or more if you file a joint return). State income tax rate comparisons Modified adjusted gross income (MAGI). State income tax rate comparisons   For most taxpayers, MAGI is adjusted gross income (AGI) as figured on their federal income tax return before subtracting any deduction for student loan interest. State income tax rate comparisons However, as discussed below, there may be other modifications. State income tax rate comparisons Table 4-2 shows how the amount of your MAGI can affect your student loan interest deduction. State income tax rate comparisons Table 4-2. State income tax rate comparisons Effect of MAGI on Student Loan Interest Deduction IF your filing status is. State income tax rate comparisons . State income tax rate comparisons . State income tax rate comparisons AND your MAGI is. State income tax rate comparisons . State income tax rate comparisons . State income tax rate comparisons THEN your student loan interest deduction is. State income tax rate comparisons . State income tax rate comparisons . State income tax rate comparisons single,  head of household, or qualifying widow(er) not more than $60,000 not affected by the phaseout. State income tax rate comparisons more than $60,000  but less than $75,000 reduced because of the phaseout. State income tax rate comparisons $75,000 or more eliminated by the phaseout. State income tax rate comparisons married filing joint return not more than $125,000 not affected by the phaseout. State income tax rate comparisons more than $125,000 but less than $155,000 reduced because of the phaseout. State income tax rate comparisons $155,000 or more eliminated by the phaseout. State income tax rate comparisons MAGI when using Form 1040A. State income tax rate comparisons   If you file Form 1040A, your MAGI is the AGI on line 22 of that form figured without taking into account any amount on line 18 (student loan interest deduction) and line 19 (tuition and fees deduction). State income tax rate comparisons MAGI when using Form 1040. State income tax rate comparisons   If you file Form 1040, your MAGI is the AGI on line 38 of that form figured without taking into account any amount on line 33 (student loan interest deduction), line 34 (tuition and fees deduction), or line 35 (domestic production activities deduction), and modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion, Foreign housing deduction, Exclusion of income by bona fide residents of American Samoa, and Exclusion of income by bona fide residents of Puerto Rico. State income tax rate comparisons MAGI when using Form 1040NR. State income tax rate comparisons   If you file Form 1040NR, your MAGI is the AGI on line 36 of that form figured without taking into account any amount on line 33 (student loan interest deduction) and line 34 (domestic production activities deduction). State income tax rate comparisons MAGI when using Form 1040NR-EZ. State income tax rate comparisons   If you file Form 1040NR-EZ, your MAGI is the AGI on line 10 of that form figured without taking into account any amount on line 9 (student loan interest deduction). State income tax rate comparisons Phaseout. State income tax rate comparisons   If your MAGI is within the range of incomes where the credit must be reduced, you must figure your reduced deduction. State income tax rate comparisons To figure the phaseout, multiply your interest deduction (before the phaseout) by a fraction. State income tax rate comparisons The numerator is your MAGI minus $60,000 ($125,000 in the case of a joint return). State income tax rate comparisons The denominator is $15,000 ($30,000 in the case of a joint return). State income tax rate comparisons Subtract the result from your deduction (before the phaseout) to give you the amount you can deduct. State income tax rate comparisons Example 1. State income tax rate comparisons During 2013 you paid $800 interest on a qualified student loan. State income tax rate comparisons Your 2013 MAGI is $145,000 and you are filing a joint return. State income tax rate comparisons You must reduce your deduction by $533, figured as follows. State income tax rate comparisons   $800 × $145,000 − $125,000  $30,000 = $533   Your reduced student loan interest deduction is $267 ($800 − $533). State income tax rate comparisons Example 2. State income tax rate comparisons The facts are the same as in Example 1 except that you paid $2,750 interest. State income tax rate comparisons Your maximum deduction for 2013 is $2,500. State income tax rate comparisons You must reduce your maximum deduction by $1,667, figured as follows. State income tax rate comparisons   $2,500 × $145,000 − $125,000  $30,000 = $1,667   In this example, your reduced student loan interest deduction is $833 ($2,500 − $1,667). State income tax rate comparisons Which Worksheet To Use Generally, you figure the deduction using the Student Loan Interest Deduction Worksheet in the instructions for Form 1040, Form 1040A, or Form 1040NR. State income tax rate comparisons However, if you are filing Form 2555, Foreign Earned Income, Form 2555-EZ, Foreign Earned Income Exclusion, or Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa, or you are excluding income from sources within Puerto Rico, you must complete Worksheet 4-1. State income tax rate comparisons Student Loan Interest Deduction Worksheet at the end of this chapter. State income tax rate comparisons Claiming the Deduction The student loan interest deduction is an adjustment to income. State income tax rate comparisons To claim the deduction, enter the allowable amount on line 33 (Form 1040), line 18 (Form 1040A), line 33 (Form 1040NR), or line 9 (Form 1040NR-EZ). State income tax rate comparisons Worksheet 4-1. State income tax rate comparisons Student Loan Interest Deduction Worksheet Use this worksheet instead of the worksheet in the Form 1040 instructions if you are filing Form 2555, 2555-EZ, or 4563, or you are excluding income from sources within Puerto Rico. State income tax rate comparisons Before using this worksheet, you must complete Form 1040, lines 7 through 32, plus any amount to be entered on the dotted line next to line 36. State income tax rate comparisons 1. State income tax rate comparisons Enter the total interest you paid in 2013 on qualified student loans. State income tax rate comparisons Do not enter  more than $2,500 1. State income tax rate comparisons   2. State income tax rate comparisons Enter the amount from Form 1040, line 22 2. State income tax rate comparisons       3. State income tax rate comparisons Enter the total of the amounts from Form 1040,  lines 23 through 32 3. State income tax rate comparisons           4. State income tax rate comparisons Enter the total of any amounts entered on the dotted line next to Form 1040, line 36 4. State income tax rate comparisons           5. State income tax rate comparisons Add lines 3 and 4 5. State income tax rate comparisons       6. State income tax rate comparisons Subtract line 5 from line 2 6. State income tax rate comparisons       7. State income tax rate comparisons Enter any foreign earned income exclusion and/or housing  exclusion (Form 2555, line 45, or Form 2555-EZ, line 18) 7. State income tax rate comparisons       8. State income tax rate comparisons Enter any foreign housing deduction (Form 2555, line 50) 8. State income tax rate comparisons       9. State income tax rate comparisons Enter the amount of income from Puerto Rico you are excluding 9. State income tax rate comparisons       10. State income tax rate comparisons Enter the amount of income from American Samoa  you are excluding (Form 4563, line 15) 10. State income tax rate comparisons       11. State income tax rate comparisons Add lines 6 through 10. State income tax rate comparisons This is your modified adjusted gross income 11. State income tax rate comparisons   12. State income tax rate comparisons Enter the amount shown below for your filing status 12. State income tax rate comparisons     •Single, head of household, or qualifying widow(er)—$60,000       •Married filing jointly—$125,000     13. State income tax rate comparisons Is the amount on line 11 more than the amount on line 12?       □ No. State income tax rate comparisons Skip lines 13 and 14, enter -0- on line 15, and go to line 16. State income tax rate comparisons       □ Yes. State income tax rate comparisons Subtract line 12 from line 11 13. State income tax rate comparisons   14. State income tax rate comparisons Divide line 13 by $15,000 ($30,000 if married filing jointly). State income tax rate comparisons Enter the result as a decimal  (rounded to at least three places). State income tax rate comparisons If the result is 1. State income tax rate comparisons 000 or more, enter 1. State income tax rate comparisons 000 14. State income tax rate comparisons . State income tax rate comparisons 15. State income tax rate comparisons Multiply line 1 by line 14 15. State income tax rate comparisons   16. State income tax rate comparisons Student loan interest deduction. State income tax rate comparisons Subtract line 15 from line 1. State income tax rate comparisons Enter the result here  and on Form 1040, line 33. State income tax rate comparisons Do not include this amount in figuring any other  deduction on your return (such as on Schedule A, C, E, etc. State income tax rate comparisons ) 16. State income tax rate comparisons   Prev  Up  Next   Home   More Online Publications