Hey kids!
Did you just graduate college? Med school? Law school? Are you in an enormous amount of debt?
Well… Uncle Sam at least provides you with some relief.. -_-
Life Pro Tip #1
- You can actually deduct your taxable income by the amount of your student loan interest payments.
In the world of tax accounting, we have two kinds of deductions:
- deductions for adjusted gross income (AGI)
- deduction from adjusted gross income (AGI) aka itemized deductions
A taxpayer can claim deduction for AGI even if they choose not to itemize. In other words, if you choose to take the standard deduction (which is the case for most people), you can still benefit from deductions for AGI.
Deductions resulting from student interest loans happen to be a deduction for AGI. So you're good to go! In addition to claiming the standard deduction (which was significantly increased in 2018), you can claim any additional deductions for AGI, thereby decreasing your taxable income.
So get out there and reduce your taxable income! Hopefully it’ll save you a few bucks. And for you future doctors, maybe a few thousand ;)
Thanks for reading!