Yes, an individual can deduct their student loan interest on their tax return. As per Section 221 of the Internal Revenue Code, individuals who have taken out qualified student loans can deduct up to $2,500 in interest paid per year on their tax returns. The deduction is only available if the individual is legally obligated to pay the loan and the loan was taken out solely to pay for qualified education expenses.
However, there are some limitations to the deduction. The deduction is subject to a phase-out for higher-income earners, and individuals who file as married filing separately are not eligible for the deduction. Additionally, if an individual claims the student loan interest deduction, they cannot also claim an education credit, such as the American Opportunity Credit or Lifetime Learning Credit, for the same student in the same tax year.
To claim the deduction, individuals should receive Form 1098-E from their loan provider that reports how much interest was paid on the loan during the tax year. This information should be used to complete Form 1040, Schedule 1, where the deduction can be claimed.
It is important to note that tax laws are subject to change, and individuals should consult with a licensed tax professional for specific advice related to their unique circumstances.
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