Do I Get More Money Back When I File a 1098-E?

If you have a student loan you probably receive a 1098-E every year, but this form is not necessary for your taxes, and sometimes may not list all of your deductible interest payments. The 1098-E is just a statement meant to help you keep track of your student debt interest payments.

Identification

You do not file the 1098-E with a 1040 tax return and the form does not necessarily mean you can deduct student loan interest on your taxes. You can only deduct student loan interest when you use the funds on qualified educational expenses -- usually just tuition, fees, supplies and books. If you have a private loan, the lender also may require you to sign a W-9S to certify that all of your funds went to schooling.

Student Loan Interest Deduction

Your 1098-E may not contain every deductible expense related to a student loan. For example, the 1098-E may not list origination fees, which you usually can deduct. Even if you do not receive a 1098-E you can still deduct interest. Lenders only have to send out a 1098-E when you pay more than $600 in interest in any one year, according to the Internal Revenue Service (IRS).

Considerations

Lenders that send you a 1098-E have filed the form with the IRS. This makes it easier for the IRS to cross-reference your 1098-E with the student loan interest deduction you declare on your taxes. Ask your lender for a copy of your 1098-E if you do not receive it during the first few months of the new year, or ask how much interest you have paid on the loan.

Warning

The IRS limits the student loan interest deduction to $2,500 at the time of publication, and you cannot make more than $75,000 in net income, or $150,000 if you file a joint return. Also, you must be legally liable to pay the loan. You cannot, for example, take a tax deduction for making payments on a friend's loan unless you co-sign on it. A tax professional can help you determine if you can deduct student debt interest payments and any expenses related to the loan.

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