What is the Maximum Student Loan Interest Deduction allowable in 2007?
1)The maximum amount a taxpayer can deduct for Student Loan interest in 2007?
Per the IRS for the Tax Year 2007, the maximum deductible interest on a qualified student loan is $2,500 per return.
2) Are Student loan interest deducted on any Student Loans?
The IRS allows a Student Loan Interest deduction on qualified loans in order for a taxpayer to be able to deduct Student Loan Interest. The IRS states that "a qualified student loan is a loan you took out solely to pay for qualified higher education expenses". These so called higher education expenses must satisfy all of the following conditions as follows:
a). For you, your spouse, or a person who was your dependent when you took out the loan.
b). Paid or incurred within a reasonable time before or after you took out the loan.
c) For education furnished during an academic period when the recipient was an eligible student.
3)Also, are these student loan interest subject to phase out rules?
For Taxpayers who file married filing jointly
The full $2,500 deduction is allowed only when your modified adjusted gross income (MAGI) is $100,000 or less.
If your MAGI is more than $105,000, but less than $135,000, the amount of your student loan interest deduction is gradually reduced.
If your MAGI is $135,000 or more, no Student Loan Interest deduction is allowed!
For Taxpayers whose filing status is single, head of household, or qualifying widow(er)
The full $2,500 deduction is allowed only when the modified adjusted gross income (MAGI) is equal to or below $50,000.
The full $2,500 deduction is gradually reduced when the modified adjusted gross income (MAGI) is $50,000 and $65,000,
If your MAGI amount is $65,000 or more, no Student Loan Interest deduction is allowed!
For Taxpayers filing married filing separately
No Student Loan deduction is allowed for filing under this status,
Furthermore, no Student Loan Interest deduction is allowed, if the taxpayer can be claimed as a dependent, or if the loan is from a related party or a qualified employer plan!