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I have a substantial amount of loans from my bachelor's degree. I worked for a few years, saved money, and then returned to school full time. While working, my Modified Adjusted Gross Income (MAGI) was > $75,000 -- so student loan interest was not deductible, from what I understand.

I am now in graduate school and my MAGI is far below $60,000, so in principle if I had student loan payments, the interest could be deductible.

My student loans are currently in deferment.

Could I still make voluntary interest payments and deduct that amount from my taxes?

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  • I'm not sure of the answer, but it seems to me that interest payments are still interest payments, voluntary or not. I'll be able to tell you for sure when I'm filing taxes next year :P
    – Bobo
    Sep 16, 2014 at 20:41
  • I've been able to deduct (or whatever the proper tax return term is) my student loan interest, even though my MAGI is over $75k
    – warren
    Sep 18, 2014 at 18:55
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    @warren if you're married your deduction is phased out at 155k. if you're not married, you might want to contact an expert before the irs contacts you ;) - irs.gov/publications/p970/…
    – jadoti
    Oct 2, 2014 at 2:37
  • @jadoti - I'm married :) ..but the deductions I've claimed have always been automated by the tax tools I use.
    – warren
    Oct 2, 2014 at 13:26

2 Answers 2

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I would consult a tax professional for specific help.

On my own research, I believe that you could. I know that when I made payments when I was in school for my undergraduate, I made payments on the interest. I believe that I was even told by my financial aid office that I could deduct the interest that I paid. I made not much money so I wasn't anywhere close to the MAGI >75k, but I believe you still could.

Not only that but one other thing to consider is that if you have an unsubisidized loan, the interest still accrues when you are in school. In that case, it might be better to make at least some payments. It would save you from the total loan amount ballooning so much while you are in school.

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Yes, as long as you are not filing "Married, Filing Separately," you can deduct student loan interest expense as an adjustment to income. Since your MAGI is < $60k, you can deduct the lesser of $2,500 or the actual interest expense.

http://www.irs.gov/taxtopics/tc456.html

http://www.irs.gov/publications/p970/ch04.html

You didn't mention how you might file your return. If you're filing jointly in future years, the MAGI threshold prior to any phaseout is raised to $125k (for CY 2013).

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