April 15 is not too far away. Tax time is hardly a date on the calendar worth marking for celebration. It doesn’t matter if you live in Illinois or some other state. Even those who live in the few states that don’t have income tax feel a pinch.
Adding to the burden of too many individuals is the fact that they have student loans outstanding. You don’t have to be a just-out-of-school doctor or lawyer to appreciate that the cost of college can be a huge weight. For many it can wind up contributing to a decision to seek debt relief — a move that may help alleviate some of that loan pressure.
The federal government is not blind to the hardship that so many individuals confront in this regard. That’s why as the tax season approaches it may be helpful for student loan holders to do a quick assessment of what help may be possible.
As explained in a recent item on Fox Business, single taxpayers who have paid interest on student loans in the past year may be able to deduct up to $2,500 of that cost on their taxes.
The amount of the deduction depends on a few things, such as what tax bracket you happen to be in. In addition, the loan you have paid interest on has to be in your name and you have to have been in school for a certain amount of time based on when the loan was taken out.
Married couples who both are paying on loans and who are filing jointly can claim up to $2,500 in student loan interest deductions. However, there can be something of a marriage penalty in that joint filing combines incomes. If the repayment plan on the loans is income driven it can drive payments to uncomfortable levels.
There are many financial challenges today but they don’t have to be faced alone. Consulting an experienced attorney is one way to learn and explore the best possible options for a given situation.