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Posted by wrldruler on March 12, 2007, 5:13 am
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My wife had 8 years worth of student loans spread across
SallieMae and ACS. She hadn't paid a dime of payments to any
of them yet -- they were all in In-School or Economic
Deferment.
Before July 2006, we consolidated all of them. That put the
loan in repayment, and we paid interest only for 4 months of
2006, at $200 each, equals $800. Got a 1098 for $800. No
problem here.
But then I get a 1098-E for the amount of nearly $1,800. No
idea where this came from. Certainly didn't come out of our
pockets.
The only thing I can think is that she had accrued $1,800 of
interest with ACS. We then paid off the principle and that
$1,800 interest with the SallieMae consolidated loan. So ACS
considers that we paid $1,800 in interest for 2006. But we
didn't really pay it. It just got capitalized into the new
SallieMae loan.
So can we take the $1,800 as a deduction for 2006?
Thanks,
Chris
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Posted by Frederick Lorca on March 13, 2007, 6:46 pm
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> So can we take the $1,800 as a deduction for 2006?
Up to $2,500 of student loan interest is deductible if your
income is within the limits specified on page 29 of IRS
Publication 970.
http://www.irs.gov/pub/irs-pdf/p970.pdf
Capitalized interest is addressed on page 27.
Frederick Lorca
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
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<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
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<< Copyright (2006) - All rights reserved. >>
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Posted by Shyster1040 on March 14, 2007, 12:22 am
Please log in for more thread options If your wife had accrued but unpaid interest on one of her
original student loans that had been capitalized, and she
subsequently satisfies that original loan by using a
consolidation loan while some of the capitalized interest is
still outstanding, she has paid that capitalized interest
with the money she borrowed under the consolidation loan,
and may deduct it if she otherwise qualifies for the year in
which the consolidation loan proceeds were disbursed.
The interest paid off with the consolidation loan is
interest on a "qualified education loan" deductible under
Sec. 221 of the Internal Revenue Code, and there does not
appear to be any provision that denies the deduction in the
case of a refinancing of an original qualified education
loan by means of another loan.
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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