It’s tax season, and hopefully, for you, that means getting some of the hard-earned money you made the year before, back into your pocket – and if you’ve paid interest on student loan debt, you may.
Each year, when you file your taxes, you can deduct the interest that you paid on student loans the year prior. Depending on how much you earned, how you file your taxes, and how much interest you paid, you can get money back in your pocket at the top of the year. However, the yearly interest deduction cap is $2,500 and you can’t get money back for interest payments of more than $2,500. Here are some other stipulations:
- You must have paid interest on student loans during the tax year.
- You cannot earn more than $80,000 per year ($160,000 if married).
- You cannot be claimed as a dependent on someone else’s tax return.
- Your filing status cannot be married filing separately.
With the income stipulations, you may not qualify for the student loan deduction, so what now? Student loan refinancing can be a great way to save on your student loan debt, especially if you don’t qualify for the student loan interest tax deduction. ADA Members save more than $33k on average over the life of their Laurel Road loan.
If you refinance your student loans, you may be able to reduce your monthly payments and save all year long not just at tax time. Learn more about Laurel Road student loan refinancing here.
This article was provided by Laurel Road, a student loan refinancing company that ADA exclusively endorses as a member benefit, and contains links to advertising content.
Average savings calculated based on single loans refinanced by ADA members from 9/2015 to 12/2017 where borrowers’ previous rates were disclosed. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates and other factors.
Laurel Road Bank does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Please consult your own tax, legal and accounting advisors before engaging in any transaction.