Reduce taxable income, reduce and lower taxes. That is the name of the game in tax deduction. Now that we better understand tax deductions — and the two types that tax filers must choose from — let’s look at the most common tax deductions available to you when preparing your 2021 tax returns.
Student Loan Interest is a popular deduction among all college graduates (and their parents), especially among those with massive student loan debt. Paying back student loans can be quite a long and grueling process, but the student loan interest deduction does offer a little relief.
This deduction allows filers to deduct up to $2,500 from taxable income if they paid interest on a qualifying student loan, either for themselves or a dependent.
There are qualifications, of course, student loan deduction depends largely on modified adjusted gross income (MAGI) and the respective tax bracket. For example, if a filer’s MAGI is less than $85,000, or $170,000 if filed jointly, then student loan interest paid on both federal and private student loans can be deducted. Here are a couple of examples of the criteria: