topic Re: Student Loan interest in Student Loans

Student Loan interest

Anonymous — Tue, 23 Feb 2010 17:40:53 GMT

My husband has 2 student loans he is paying on. One is in his name, one is in his dad's name. Can we put down the student loan interest on our taxes from both loans? I already did our taxes and submitted them. Now his mom is saying we can't put it down. I assumed we could since we paid them. I just looked it up and one thing I found said that the parent can deduct the interest if the child was a dependent when the loan was received. So it sounds like technically they can still write down the student loan interest on THEIR taxes even though they didn't pay a dime on the loan this year. I don't agree with that. I just want to know am I in trouble for putting it down on MY taxes? It was $298 on their loan and $131 on my husbands.

Re: Student Loan interest

Bocklin — Tue, 23 Feb 2010 18:27:47 GMT

You need to include the student loan interest for your husband on YOUR tax return. His student loan interest is NOT deductible on his parents return.

If a parent or someone else claims you as a dependent on his or her return, you may not deduct interest on your return for student loan interest you paid. Additionally, the person who claims you as a dependent many not deduct any part of the interest where you are the borrower legally obligated to repay the loan.

You and your husband can deduct $131 on your taxes, as long as you file a joint return (married filing seperate is ineligible).

And lastly, that IRS has better things to do than chase after tax on $298... I wouldn't lose any sleep over it.

Message Edited by Bocklin on 02-23-2010 10:27 AM

Re: Student Loan interest

Anonymous — Tue, 23 Feb 2010 18:28:18 GMT

tell your parents to deduct it on their return.

Re: Student Loan interest

Anonymous — Tue, 23 Feb 2010 18:48:47 GMT

Brocklin I DID include all of it on our tax return. We pay both loans, automatic account withdrawl, it's just that one of them is in his dad's name. He is not a dependent and is not claimed on his parents taxes anymore. But he was a dependent at the time the loan was received 8 years ago.

Re: Student Loan interest

Bocklin — Tue, 23 Feb 2010 19:14:29 GMT

Yes, I understood that. Sorry if my response was confusing. The point being, though, is that you are only eligible to deduct those interest payments for which you are legally liable, i.e. the $131 in interest on the loan reported from the account linked to your husband's social security number.

In regards to your error, though, I would not worry about it. Legally you should file an amended income tax return and pay the additional tax due, but like I said before, the IRS isn't going to be coming to your door unless you are randomly selected for an audit, which is very unlikely. In 3 years you will pass the statue of limitations on the 2009 income tax return, and it won't matter anyway.

Message Edited by Bocklin on 02-23-2010 11:14 AM

Re: Student Loan interest

Anonymous — Tue, 23 Feb 2010 19:17:23 GMT

OK, thanks for clarifying.

Re: Student Loan interest

laz98 — Wed, 24 Feb 2010 00:30:04 GMT

bocklin, where did you get your information about the auditing SOL? i'm curious to know, because i was fairly certain it was longer.

also, don't be too quick to write the IRS off. this year is going to be the first year in 30 or so years that the IRS is really going to ramp up their auditing. so i would recommend that the OP get the correct information in so she won't have to worry about it

Re: Student Loan interest

Bocklin — Wed, 24 Feb 2010 01:03:15 GMT

It has always been a 3 year statute of limitations from the due date or the date of filing of the original return, whichever is later (amendments do not adjust SOL unless in the last 60 days of the original SOL, where it extends the SOL to 60 days from the date the amendment is received).

For gross omissions, those greater than 25% of income, the statute of limitations is 6 years.

The IRS can always ask you to sign a form to extend the SOL, but you most certainly are under no obligation to do so.

For a false or fradulent return with the intent to evade tax, or where there is no return filed at all, there is no statute of limitations.

Where did I get my info? This is what I do.

Also, the IRS really started ramping up auditing about 5 years ago... but the word 'audit' does not mean a complete audit. Most individual audits are about a particular item or two on the tax return. Still, only a small fraction of tax returns receive any type of audit. People with middle class W-2-based income are very unlikely to receive an audit. Most audits are for high income, schedule c, s corporations, etc... not regular Joes... that is, after all, where the money is.

Message Edited by Bocklin on 02-23-2010 05:03 PM

Re: Student Loan interest

laz98 — Wed, 24 Feb 2010 04:31:36 GMT

so you're an accountant?

Re: Student Loan interest

Bocklin — Wed, 24 Feb 2010 04:33:27 GMT

Yes, until I finish a nursing degree...

Re: Student Loan interest

laz98 — Wed, 24 Feb 2010 04:50:56 GMT

oh...so you're not a CPA? you must like really intense jobs!

Re: Student Loan interest

Bocklin — Wed, 24 Feb 2010 04:59:32 GMT

I never went back to school for a masters degree so I could sit for the exam. You need 150 hours in my state. I do, however, have 10 years of great experience including near 10,000 tax returns under my belt. In my office I'm the go-to-guy for random tax questions.

Re: Student Loan interest

laz98 — Wed, 24 Feb 2010 05:04:03 GMT

that's good enough for me! i just asked because my in-laws are CPAs

personally, i hate numbers waaaaaaaaaaaaaaaaaaaayyy too much to do that kind of work!

Re: Student Loan interest

Bocklin — Wed, 24 Feb 2010 05:06:59 GMT

Haha... me too!

Sometimes it takes a while before you figure out what you were really supposed to do in life.