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Imagine that, another tax question (student loan interest)

Posted on 2/12/11 at 1:32 pm
Posted by Archie Bengal Bunker
Member since Jun 2008
15520 posts
Posted on 2/12/11 at 1:32 pm
Sallie Mae is stating that interest paid this year on a student loan is not tax deductible, due to the fact that it is a private loan. I call hogwash because the loan was used to pay for schooling. Sallie Mae issued a 1098-E for last year (2009), but this year is saying "Although you may have paid interest in 2010, it is ineligible for a tax deduction."

The interest paid this year is over $600. However, during a phone conversation, Sallie says this is a private loan and not deductible. Under what circumstances would this loan interest not be deductible? Since it is over $600, will there be a problem if I claim it without the 1098-E?

Lastly, I read that I can send them a W-9S to certify the funds were used solely for education expenses, which would make the interest tax deductible. I just do not understand how they issued a 1098-E last year, but this year will not, as I did not have to send them a W-9S last year.
Posted by xenon16
Metry Brah
Member since Sep 2008
3528 posts
Posted on 2/13/11 at 10:42 pm to
On my own return, I'd take the deduction and take the risk of an audit - especially if you can support the tuition use of the money

Professionally, I'd research it more
Posted by Catman88
Baton Rouge, LA
Member since Dec 2004
49125 posts
Posted on 2/14/11 at 11:41 am to
My student loan isnt through Sallie Mae but through ACS and they sent me a 1098-E and it was tax deductable. Why would Sallie Mae be any different?
Posted by Archie Bengal Bunker
Member since Jun 2008
15520 posts
Posted on 2/14/11 at 6:13 pm to
quote:


My student loan isnt through Sallie Mae but through ACS and they sent me a 1098-E and it was tax deductable. Why would Sallie Mae be any different?


I don't know, that is kinda my question. They sent me a 1098-E last year, but they are saying the interest is not deductible this year. As far as I know, nothing has changed.

I think it should be claimable, but my only concern is that if I claim it without them reporting it, it will leave me open to audit. From researching online, it looks like a W-9S can certify that the funds were used for school. I just do not understand why I would have to do that this year and not last.

Is there a negative for claiming this without a 1098-E, or is the 1098-E just for my records? For instance, you can still file a return if an emoployer for whatever reason (bankrupt, shutdown, etc.) does not issue you a W-2.
Posted by Archie Bengal Bunker
Member since Jun 2008
15520 posts
Posted on 2/15/11 at 7:01 pm to
I am going to claim it. After further reading about pub 970, even credit card interest is tax deductible if used for qualified expenses at an eligible institution. Even though this is not a credit card loan, I am sure a credit card would not issue a 1098-E. I am just going to print each of the loan statements for record purposes.

Sallie Mae has outsourced their customer service to India, and it is impossible. The "loan specialist" kept saying that it is a private loan. Private is irrelevant, from what I have read.


Pub 970

quote:

Interest on revolving lines of credit. This interest, which includes interest on credit card debt, is student loan interest if the borrower uses the line of credit (credit card) only to pay qualified education expenses. See Qualified Education Expenses , earlier.
Posted by geaux1tigers1
Member since Jun 2010
84 posts
Posted on 2/22/11 at 10:35 pm to
I wish it wasn't limited. Paying over $4000 a year in interest = FML. I still owe more than I got.
Posted by LifeTimeTiger
Baton Rouge
Member since Dec 2003
727 posts
Posted on 2/23/11 at 8:36 am to
At least you can deduct yours. My wife still owes a ton and I am not eligible for deduction because apparently I'm "rich" ie make over 150k
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