Over 70% of college graduates carry at least some student loan debts, making them a fact of life for most people who’ve pursued higher education. While most of the time they feel like a financial burden, there are a few advantages, specifically when tax filing season comes around. Understanding how student debt affects liability can lower your bill and might help you qualify for reduced payment programs.

Student Loan Interest Deduction When Tax Filing

As a general rule, interest paid on private debts isn’t tax deductible. However, the code makes an exemption for student loans, as long as your income isn’t too high. Taxpayers with modified adjusted gross incomes (MAGI) of less than $80,000, or married couples who made $165,000, can deduct up to $2,500 of student loan interest every year. This exemption applies both to private and federal student loans, taken out to benefit yourself, your spouse, or any dependents attending a recognized institute of higher learning.

Income-Based Repayment Plans

The Department of Education offers a few income-based repayment options to help relieve the burden of student debt and eventually repay your loans. However, many of these programs require proof of income, usually in the form of tax returns from the IRS. On-time, accurate tax filing will help you qualify for a loan repayment program, which could save hundreds of dollars every month and keep your accounts out of default.

The tax code can be confusing and complex, which is why taxpayers throughout the Greater Atlanta, GA, area turn to JJR & Associates LLC for guidance and professional insight. Their accountants have the expertise to ensure you get every deduction you qualify for, eliminate mistakes, and lower liability as much as possible. Visit the website for more on their wide range of tax filing and accounting services, follow them on Twitter for more tips, or call (404) 437-7748 to make an appointment today.