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Taxact free 11. Taxact free   Employer-Provided Educational Assistance Table of Contents Introduction Working condition fringe benefit. Taxact free Introduction If you receive educational assistance benefits from your employer under an educational assistance program, you can exclude up to $5,250 of those benefits each year. Taxact free This means your employer should not include those benefits with your wages, tips, and other compensation shown in box 1 of your Form W-2. Taxact free This also means that you do not have to include the benefits on your income tax return. Taxact free You cannot use any of the tax-free education expenses paid for by your employer as the basis for any other deduction or credit, including the American opportunity credit and lifetime learning credit. Taxact free Educational assistance program. Taxact free   To qualify as an educational assistance program, the plan must be written and must meet certain other requirements. Taxact free Your employer can tell you whether there is a qualified program where you work. Taxact free Educational assistance benefits. Taxact free   Tax-free educational assistance benefits include payments for tuition, fees and similar expenses, books, supplies, and equipment. Taxact free Education generally includes any form of instruction or training that improves or develops your capabilities. Taxact free The payments do not have to be for work-related courses or courses that are part of a degree program. Taxact free   Educational assistance benefits do not include payments for the following items. Taxact free Meals, lodging, or transportation. Taxact free Tools or supplies (other than textbooks) that you can keep after completing the course of instruction. Taxact free Courses involving sports, games, or hobbies unless they: Have a reasonable relationship to the business of your employer, or Are required as part of a degree program. Taxact free Benefits over $5,250. Taxact free   If your employer pays more than $5,250 in educational assistance benefits for you during the year, you must generally pay tax on the amount over $5,250. Taxact free Your employer should include in your wages (Form W-2, box 1) the amount that you must include in income. Taxact free Working condition fringe benefit. Taxact free    However, if the benefits over $5,250 also qualify as a working condition fringe benefit, your employer does not have to include them in your wages. Taxact free A working condition fringe benefit is a benefit which, had you paid for it, you could deduct as an employee business expense. Taxact free For more information on working condition fringe benefits, see Working Condition Benefits in chapter 2 of Publication 15-B, Employer's Tax Guide to Fringe Benefits. Taxact free Prev  Up  Next   Home   More Online Publications
 
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Taxact free 4. Taxact free   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. Taxact free 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. Taxact free 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. Taxact free This deduction can reduce the amount of your income subject to tax by up to $2,500 in 2013. Taxact free The student loan interest deduction is taken as an adjustment to income. Taxact free This means you can claim this deduction even if you do not itemize deductions on Schedule A (Form 1040). Taxact free 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. Taxact free Table 4-1. Taxact free Student Loan Interest Deduction at a Glance This table summarizes the features of the student loan interest deduction. Taxact free Do not rely on this table alone. Taxact free Refer to the text for complete details. Taxact free Feature   Description Maximum benefit   You can reduce your income subject to tax by up to $2,500. Taxact free 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. Taxact free Student qualifications   The student must be: •you, your spouse, or your dependent, and  •enrolled at least half-time in a degree program. Taxact free Time limit on deduction   You can deduct interest paid during the remaining period of your student loan. Taxact free 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). Taxact free Student Loan Interest Defined Student loan interest is interest you paid during the year on a qualified student loan. Taxact free It includes both required and voluntary interest payments. Taxact free 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. Taxact free Loans from the following sources are not qualified student loans. Taxact free A related person. Taxact free A qualified employer plan. Taxact free Your dependent. Taxact free   Generally, your dependent is someone who is either a: Qualifying child, or Qualifying relative. Taxact free You can find more information about dependents in Publication 501. Taxact free Exceptions. Taxact free   For purposes of the student loan interest deduction, there are the following exceptions to the general rules for dependents. Taxact free An individual can be your dependent even if you are the dependent of another taxpayer. Taxact free An individual can be your dependent even if the individual files a joint return with a spouse. Taxact free 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). Taxact free Reasonable period of time. Taxact free   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. Taxact free   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. Taxact free 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. Taxact free   If neither of the above situations applies, the reasonable period of time usually is determined based on all the relevant facts and circumstances. Taxact free Academic period. Taxact free   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. Taxact free 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. Taxact free Eligible student. Taxact free   This is a student who was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential. Taxact free Enrolled at least half-time. Taxact free   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. Taxact free   The standard for what is half of the normal full-time work load is determined by each eligible educational institution. Taxact free However, the standard may not be lower than any of those established by the U. Taxact free S. Taxact free Department of Education under the Higher Education Act of 1965. Taxact free Related person. Taxact free   You cannot deduct interest on a loan you get from a related person. Taxact free Related persons include: Your spouse, Your brothers and sisters, Your half brothers and half sisters, Your ancestors (parents, grandparents, etc. Taxact free ), Your lineal descendants (children, grandchildren, etc. Taxact free ), and Certain corporations, partnerships, trusts, and exempt organizations. Taxact free Qualified employer plan. Taxact free   You cannot deduct interest on a loan made under a qualified employer plan or under a contract purchased under such a plan. Taxact free 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. Taxact free They include amounts paid for the following items. Taxact free Tuition and fees. Taxact free Room and board. Taxact free Books, supplies, and equipment. Taxact free Other necessary expenses (such as transportation). Taxact free 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. Taxact free Eligible educational institution. Taxact free   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. Taxact free S. Taxact free Department of Education. Taxact free It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Taxact free   Certain educational institutions located outside the United States also participate in the U. Taxact free S. Taxact free Department of Education's Federal Student Aid (FSA) programs. Taxact free   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. Taxact free   An educational institution must meet the above criteria only during the academic period(s) for which the student loan was incurred. Taxact free The deductibility of interest on the loan is not affected by the institution's subsequent loss of eligibility. Taxact free    The educational institution should be able to tell you if it is an eligible educational institution. Taxact free 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. Taxact free Employer-provided educational assistance. Taxact free See chapter 11, Employer-Provided Educational Assistance . Taxact free Tax-free distribution of earnings from a Coverdell education savings account (ESA). Taxact free See Tax-Free Distributions in chapter 7, Coverdell Education Savings Account. Taxact free Tax-free distribution of earnings from a qualified tuition program (QTP). Taxact free See Figuring the Taxable Portion of a Distribution in chapter 8, Qualified Tuition Program. Taxact free U. Taxact free S. Taxact free savings bond interest that you exclude from income because it is used to pay qualified education expenses. Taxact free See chapter 10, Education Savings Bond Program . Taxact free The tax-free part of scholarships and fellowships. Taxact free See Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. Taxact free Veterans' educational assistance. Taxact free See Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions. Taxact free Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. Taxact free 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. Taxact free Loan origination fee. Taxact free   In general, this is a one-time fee charged by the lender when a loan is made. Taxact free 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. Taxact free A loan origination fee treated as interest accrues over the term of the loan. Taxact free   Loan origination fees were not required to be reported on Form 1098-E, Student Loan Interest Statement, for loans made before September 1, 2004. Taxact free 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. Taxact free 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. Taxact free A method that results in the double deduction of the same portion of a loan origination fee would not be reasonable. Taxact free Example. Taxact free In August 2004, Bill took out a student loan for $16,000 to pay the tuition for his senior year of college. Taxact free The lender charged a 3% loan origination fee ($480) that was withheld from the funds Bill received. Taxact free Bill began making payments on his student loan in 2013. Taxact free 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. Taxact free Bill's loan is payable in 120 equal monthly payments. Taxact free He allocates the $480 fee equally over the total number of payments ($480 ÷ 120 months = $4 per month). Taxact free Bill made 7 payments in 2013, so he paid $28 ($4 × 7) of interest attributable to the loan origination fee. Taxact free 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. Taxact free Capitalized interest. Taxact free   This is unpaid interest on a student loan that is added by the lender to the outstanding principal balance of the loan. Taxact free Capitalized interest is treated as interest for tax purposes and is deductible as payments of principal are made on the loan. Taxact free No deduction for capitalized interest is allowed in a year in which no loan payments were made. Taxact free Interest on revolving lines of credit. Taxact free   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. Taxact free See Qualified Education Expenses , earlier. Taxact free Interest on refinanced student loans. Taxact free   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. Taxact free    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. Taxact free Voluntary interest payments. Taxact free   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. Taxact free Example. Taxact free The payments on Roger's student loan were scheduled to begin in June 2012, 6 months after he graduated from college. Taxact free He began making payments as required. Taxact free In September 2013, Roger enrolled in graduate school on a full-time basis. Taxact free He applied for and was granted deferment of his loan payments while in graduate school. Taxact free Wanting to pay down his student loan as much as possible, he made loan payments in October and November 2013. Taxact free Even though these were voluntary (not required) payments, Roger can deduct the interest paid in October and November. Taxact free 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. Taxact free 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. Taxact free Example. Taxact free In August 2012, Peg took out a $10,000 student loan to pay the tuition for her senior year of college. Taxact free The lender charged a 3% loan origination fee ($300) that was withheld from the funds Peg received. Taxact free The interest (5% simple) on this loan accrued while she completed her senior year and for 6 months after she graduated. Taxact free 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. Taxact free The loan is payable over 60 months, with a payment of $200. Taxact free 51 due on the first of each month, beginning November 2013. Taxact free 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. Taxact free 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). Taxact free Payment Date   Payment   Stated Interest   Principal November 2013   $200. Taxact free 51   $44. Taxact free 27   $156. Taxact free 24 December 2013   $200. Taxact free 51   $43. Taxact free 62   $156. Taxact free 89 Totals   $401. Taxact free 02   $87. Taxact free 89   $313. Taxact free 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. Taxact free 89. Taxact free Next, she allocates the loan origination fee over the term of the loan ($300 ÷ 60 months = $5 per month). Taxact free A total of $10 ($5 of each of the two principal payments) should be treated as interest for tax purposes. Taxact free 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. Taxact free Assuming that Peg qualifies to take the student loan interest deduction, she can deduct $401. Taxact free 02 ($87. Taxact free 89 + $10 + $303. Taxact free 13). Taxact free 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. Taxact free She also will apply the remaining amount of capitalized interest ($625 − $303. Taxact free 13 = $321. Taxact free 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. Taxact free Do Not Include As Interest You cannot claim a student loan interest deduction for any of the following items. Taxact free Interest you paid on a loan if, under the terms of the loan, you are not legally obligated to make interest payments. Taxact free Loan origination fees that are payments for property or services provided by the lender, such as commitment fees or processing costs. Taxact free 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. Taxact free For more information, see Student Loan Repayment Assistance in chapter 5, Student Loan Cancellations and Repayment Assistance. Taxact free 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. Taxact free Can You Claim the Deduction Generally, you can claim the deduction if all of the following requirements are met. Taxact free Your filing status is any filing status except married filing separately. Taxact free No one else is claiming an exemption for you on his or her tax return. Taxact free You are legally obligated to pay interest on a qualified student loan. Taxact free You paid interest on a qualified student loan. Taxact free Claiming an exemption for you. Taxact free   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. Taxact free Example 1. Taxact free During 2013, Josh paid $600 interest on his qualified student loan. Taxact free Only he is legally obligated to make the payments. Taxact free No one claimed an exemption for Josh for 2013. Taxact free Assuming all other requirements are met, Josh can deduct the $600 of interest he paid on his 2013 Form 1040 or 1040A. Taxact free Example 2. Taxact free During 2013, Jo paid $1,100 interest on her qualified student loan. Taxact free Only she is legally obligated to make the payments. Taxact free Jo's parents claimed an exemption for her on their 2013 tax return. Taxact free In this case, neither Jo nor her parents may deduct the student loan interest Jo paid in 2013. Taxact free Interest paid by others. Taxact free   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. Taxact free Example 1. Taxact free Darla obtained a qualified student loan to attend college. Taxact free After Darla's graduation from college, she worked as an intern for a nonprofit organization. Taxact free As part of the internship program, the nonprofit organization made an interest payment on behalf of Darla. Taxact free This payment was treated as additional compensation and reported in box 1 of her Form W-2. Taxact free Assuming all other qualifications are met, Darla can deduct this payment of interest on her tax return. Taxact free Example 2. Taxact free Ethan obtained a qualified student loan to attend college. Taxact free After graduating from college, the first monthly payment on his loan was due in December. Taxact free As a gift, Ethan's mother made this payment for him. Taxact free No one is claiming a dependency exemption for Ethan on his or her tax return. Taxact free Assuming all other qualifications are met, Ethan can deduct this payment of interest on his tax return. Taxact free 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). Taxact free Figuring the Deduction Your student loan interest deduction for 2013 is generally the smaller of: $2,500, or The interest you paid in 2013. Taxact free However, the amount determined above may be gradually reduced (phased out) or eliminated based on your filing status and MAGI as explained below. Taxact free You can use Worksheet 4-1. Taxact free Student Loan Interest Deduction Worksheet (at the end of this chapter) to figure both your MAGI and your deduction. Taxact free Form 1098-E. Taxact free   To help you figure your student loan interest deduction, you should receive Form 1098-E. Taxact free 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. Taxact free   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. Taxact free Other interest payments, such as certain loan origination fees and capitalized interest, may not appear on the form you receive. Taxact free However, if you pay qualifying interest that is not included on Form 1098-E, you can also deduct those amounts. Taxact free See Allocating Payments Between Interest and Principal , earlier. Taxact free    The lender may ask for a completed Form W-9S, or similar statement to obtain the borrower's name, address, and taxpayer identification number. Taxact free The form may also be used by the borrower to certify that the student loan was incurred solely to pay for qualified education expenses. Taxact free 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). Taxact free 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). Taxact free Modified adjusted gross income (MAGI). Taxact free   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. Taxact free However, as discussed below, there may be other modifications. Taxact free Table 4-2 shows how the amount of your MAGI can affect your student loan interest deduction. Taxact free Table 4-2. Taxact free Effect of MAGI on Student Loan Interest Deduction IF your filing status is. Taxact free . Taxact free . Taxact free AND your MAGI is. Taxact free . Taxact free . Taxact free THEN your student loan interest deduction is. Taxact free . Taxact free . Taxact free single,  head of household, or qualifying widow(er) not more than $60,000 not affected by the phaseout. Taxact free more than $60,000  but less than $75,000 reduced because of the phaseout. Taxact free $75,000 or more eliminated by the phaseout. Taxact free married filing joint return not more than $125,000 not affected by the phaseout. Taxact free more than $125,000 but less than $155,000 reduced because of the phaseout. Taxact free $155,000 or more eliminated by the phaseout. Taxact free MAGI when using Form 1040A. Taxact free   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). Taxact free MAGI when using Form 1040. Taxact free   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. Taxact free MAGI when using Form 1040NR. Taxact free   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). Taxact free MAGI when using Form 1040NR-EZ. Taxact free   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). Taxact free Phaseout. Taxact free   If your MAGI is within the range of incomes where the credit must be reduced, you must figure your reduced deduction. Taxact free To figure the phaseout, multiply your interest deduction (before the phaseout) by a fraction. Taxact free The numerator is your MAGI minus $60,000 ($125,000 in the case of a joint return). Taxact free The denominator is $15,000 ($30,000 in the case of a joint return). Taxact free Subtract the result from your deduction (before the phaseout) to give you the amount you can deduct. Taxact free Example 1. Taxact free During 2013 you paid $800 interest on a qualified student loan. Taxact free Your 2013 MAGI is $145,000 and you are filing a joint return. Taxact free You must reduce your deduction by $533, figured as follows. Taxact free   $800 × $145,000 − $125,000  $30,000 = $533   Your reduced student loan interest deduction is $267 ($800 − $533). Taxact free Example 2. Taxact free The facts are the same as in Example 1 except that you paid $2,750 interest. Taxact free Your maximum deduction for 2013 is $2,500. Taxact free You must reduce your maximum deduction by $1,667, figured as follows. Taxact free   $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). Taxact free 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. Taxact free 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. Taxact free Student Loan Interest Deduction Worksheet at the end of this chapter. Taxact free Claiming the Deduction The student loan interest deduction is an adjustment to income. Taxact free 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). Taxact free Worksheet 4-1. Taxact free 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. Taxact free 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. Taxact free 1. Taxact free Enter the total interest you paid in 2013 on qualified student loans. Taxact free Do not enter  more than $2,500 1. Taxact free   2. Taxact free Enter the amount from Form 1040, line 22 2. Taxact free       3. Taxact free Enter the total of the amounts from Form 1040,  lines 23 through 32 3. Taxact free           4. Taxact free Enter the total of any amounts entered on the dotted line next to Form 1040, line 36 4. Taxact free           5. Taxact free Add lines 3 and 4 5. Taxact free       6. Taxact free Subtract line 5 from line 2 6. Taxact free       7. Taxact free Enter any foreign earned income exclusion and/or housing  exclusion (Form 2555, line 45, or Form 2555-EZ, line 18) 7. Taxact free       8. Taxact free Enter any foreign housing deduction (Form 2555, line 50) 8. Taxact free       9. Taxact free Enter the amount of income from Puerto Rico you are excluding 9. Taxact free       10. Taxact free Enter the amount of income from American Samoa  you are excluding (Form 4563, line 15) 10. Taxact free       11. Taxact free Add lines 6 through 10. Taxact free This is your modified adjusted gross income 11. Taxact free   12. Taxact free Enter the amount shown below for your filing status 12. Taxact free     •Single, head of household, or qualifying widow(er)—$60,000       •Married filing jointly—$125,000     13. Taxact free Is the amount on line 11 more than the amount on line 12?       □ No. Taxact free Skip lines 13 and 14, enter -0- on line 15, and go to line 16. Taxact free       □ Yes. Taxact free Subtract line 12 from line 11 13. Taxact free   14. Taxact free Divide line 13 by $15,000 ($30,000 if married filing jointly). Taxact free Enter the result as a decimal  (rounded to at least three places). Taxact free If the result is 1. Taxact free 000 or more, enter 1. Taxact free 000 14. Taxact free . Taxact free 15. Taxact free Multiply line 1 by line 14 15. Taxact free   16. Taxact free Student loan interest deduction. Taxact free Subtract line 15 from line 1. Taxact free Enter the result here  and on Form 1040, line 33. Taxact free Do not include this amount in figuring any other  deduction on your return (such as on Schedule A, C, E, etc. Taxact free ) 16. Taxact free   Prev  Up  Next   Home   More Online Publications