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Beginning in
tax year 2002, the new tax law permits much more student loan interest to
be deducted above-the-line. The law REPEALS the 60-month limit in which
interest paid on a qualified educational loan is deductible. The maximum
deduction is still limited to $2,500.
As long as the
loan is a qualified educational loan AND your adjusted gross income is
less than $50,000 if you are single, or $100,000 if you are married filing
a joint tax return, your interest is FULLY deductible. If you are single
and your adjusted gross income is less than $65,000 or you are married
filing jointly and your income is less than $130,000, you will get a
reduced deduction. These phase-out dollar amounts will be adjusted
annually for inflation AFTER tax year 2002.
Voluntary
payments, such as interest-only payments made while a loan is in
forbearance will now qualify for the above-the-line deduction. |
