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The year is almost over, you might want to tweak your last student loan payment (tax related)

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Travis-84
Regular Contributor

The year is almost over, you might want to tweak your last student loan payment (tax related)

I just thought it would be a helpful reminder that some people might want to look into their student loans with the end of the year approaching.  It may be beneficial to tweak the payment a bit to get a better result on your 2011 taxes.  I normally make a payment on the 1st of the month, but I plan on paying January's payment December 28th (the official cutoff to have the interest show up on my 1098-E (may vary by lender)

 

This way any interest paid can be claimed on this years taxes.  A write off now is better for me than a write off later. For me, the difference is small, but its still worth the 10 seconds to change the date in online bill payment.  For some peple the difference may be huge:

 

For some people. maybe making a payment in January is better.  Lets say you have already paid 2500 in interest this year.  If you can delay a payment until January 1st, then you can claim that interest on next years taxes.  (Helpful if you will pay less than 2500 in interest in 2012.)  I know payment due dates may not make this possible.   

 

Or for students who graduated in 2011, you may have paid very little in interest in 2011, but will max out the deduction in 2012 (keep in mind interest is usually paid off first in repayment, so your first few payments might all be interest).  By making a payment in December instead of January, you migth get a bigger overall interest deduction (by claiming more this year, and still maxing out next year).

 

This may not be helpful for all people, but I think its worth looking into. 

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