How To Reduce Your Tax Payments

Reduce your tax payments by claiming an interest payment deduction.

If you are occupied paying off your student loans, the last thing you want to do is to pay interest on the money that you are going to give right back to the government.  Fortunately, in lots of cases you should be able to deduct the amount of interest that you paid on your student loans.  Deducting interests on student loans is not that hard to do provided that you ensure that you meet the requirements for claiming this particular deduction on your taxes. 

First of all, you have to have the appropriate filing status - which in this case means that you could be of any filing status except for if you're married and still filing your taxes separately.  There is no explanation given as to why this specific status is exempt, yet, this is still important to take note of before you waste your time trying to fill out a deduction that you are not going to be able to claim. 

Something else that is required for the purpose of you claiming that deduction is that you cannot have another person claim you as a dependent or a tax exemption on their own tax forms.  For many people who have already graduated from college and are trying to pay off their student loans, this should not be too much of a problem.  However, it is better if you still make sure that nobody in your life is going to be claiming you as a tax deduction. 

Lastly, you have in fact paid the interest on your student loan before you can claim it as a deduction.  This also only works if you are the only person who has a real obligation to pay off the loan.  Thus, you cannot claim a deduction if you are paying interest on a loan that both you and your parents owe money on, or on a parent plus loan. 

You may also claim interest as a deduction if you're paying in full the interest on a student loan that is owed by your dependent.  However, in this particular case you can only deduct the payment if you are in fact the individual who is obligated to pay off the loans.  You will also have to claim an exemption for that dependent on your tax return. 

 

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