Saturday, October 13, 2012

Educational Loan Interest Deduction §221

Section 221 Educational Loan Interest Deduction

In response to policy arguments that not allowing interest deductions was unfair to young adults, § 221 was added to the code. Limited Deduction up to $2500. Bizarrely it is ABOVE THE LINE, this helps people that don’t itemize deductions. Thus, taxpayers taking this deduction may also claim the benefits of the standard deduction.

POLICY: Helps lower income taxpayers who are less likely able to itemize their deductions and instead take the standard deduction. Only available if the loan in qualified under § 221(d). Qualified education expenses. Reasonable link to the time you took out the loan to the time you got the educationv.

The educational loan interest deduction starts to phase out at 50,000, 105,000 jointly filing.
Above 65,000 or $135,000 jointly, no deduction at all.

Information about Deducting Student Loan Interest and Form 1098-T

No comments:

Popular Accounting Problems

The information on this site is for informational purposes only and should not be used as a substitute for the professional advice of an accountant, tax advisor, attorney, or other professional.