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You Can Deduct Student Loan Interest on Your 2020 Taxes Even if You Skipped Payments Last Year

You Can Deduct Student Loan Interest on Your 2020 Taxes Even if You Skipped Payments Last Year

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As with most types of debt, the interest on student loans can make it difficult to cut away at your principal balance. But unlike a lot of other types of debt, there is a tiny silver lining with student loan interest: it’s tax deductible.

Each year more than 12 million Americans get a little boost on their taxes thanks to the student loan interest tax deduction. It’s an above-the-line deduction, or in the terms of the IRS, an adjustment to income, which means you don’t have to itemize your taxes to claim it. You can subtract up to $2,500 of interest paid each year from your taxable income.

But for the 2020 tax year, this deduction will look different for many federal student loan borrowers, who haven’t been required to make payments for much of last year. (more…)

Posted on March 16, 2022

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